7 Emerging Markets to Invest In

By | January 4, 2012

It is hard to believe that in this economic recession, that some countries are doing extremely well, financially and are in the process of rapid growth, and industrialization.

According to data collected in 2010, at least 40 emerging markets are present and have the potential of some great financial rewards for investors.  The markets that are looking investor-friendly are Egypt, Mexico, Poland, South Korea, Turkey and South Africa.  China is always a good bet, as is Brazil and Japan, however, emerging isn’t the right term for them as they are fairly established.

Even though India has been a good market, as well as China, Mark Madden, manager at Oppenheimer Funds says “”The whole notion that you should invest only in BRICs (Brazil, Russia, India and China) is silly” and that diversifying is important.

Emerging markets are more likely to produce strong growth, and even though the U.S. is familiar turf, it might be well worth looking at some of these other countries.  Sometimes extremely volatile, they are still worth investing in, and according to market experts, at least fifteen percent of your portfolio should be in emerging markets.

Experts have said that because of the major financial swings, the risks are large, however so are the gains, but watching the market is the best way to know when to jump in.

1.         A great emerging fund is American Funds New World (NEWFX) because it combines emerging markets, and invests in in both emerging and multinationals doing business in developing nations, but you will need a broker or investor.

2.         T. Rowe Price’s Pangaro, which is a first class, no load fund.  It’s diversified to emerging markets and has shown a gain of around 16 percent at its high, which matches MSCI Emerging Markets Index.  This though, is a highly volatile fund.  It has a claim of being 38 percent more volatile than the MSCI index, and although volatility is a good predictor of down-market performance, it fell more than the MSCI index fell.

3.         The SPDR S&P China ETF is an investment in large companies located in China and is known as the weathervane for the Chinese economy.  The returns can vary from 3.45 percent, all the way up to a five-year return of a whopping 46.2 percent.  But economic or natural disasters can really cost you big, as well.

4.         ETF’s are great investments, if you have trouble sleeping over putting all of your cash into one market.  They add several countries or combinations of countries and many funds find stocks of every size to fill an investor’s portfolio.

5.         GPIF is a Government Pension Investment Fund, seeing over 114 trillion yen, for Japanese investors, and mutual fund investors and are included in the MSCI Emerging Markets Index.  As of September 2011, Japan is looking good, say’s Tomoko Yamazaki, Business Reporter for San Francisco Chronicle.  “Prospects for growth still remain strong for emerging markets relative to the developed countries, which means expected returns will be higher.”

6.         Also in China – the Shanghai SE A share index is showing a lot of promise, and as of Dec 2010, it was up 33.6 percent.  The biggest hope with these emerging markets showing so much promise, is that they would dip enough to get in.

7.         Nicholas-Applegate Emerging Markets II – NAGDX is in the top 10 performers of 2010, with a growth of over 3 percent.

Here is a chart to give you an idea of the growth potential in some investment emerging markets:

Investors appear to be scrambling to get out of the U.S. market, because of its major economic problems, and to jump on the emerging market investment train.  It looks like most underdeveloped countries that are seeing growth and development are your best bet, because the funds are still low enough to get in, and the promise of a pretty substantial growth is still on the rise.

Having patience is a major factor, though, and get rich quick hopes should not be a consideration with emerging markets.  Knowing your markets, when to buy, when to sell will keep your portfolio intact, with some pretty nice gains.

 

About Author: Kristy Ramirez is a personal finance writer for Life Insurance Finder where she helps people compare and select the best term life insurance policies to suit their needs.

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