Emerging markets represent the lion share of the world’s population and are known as a driver of global economic growth, a reputation obtained over recent decades. They already make up 58% of the world’s economy and this share is expected to increase further as their growth continues to outpace that of developed nations. The International Monetary Fund expects emerging economies to grow faster than industrialized countries at an annual rate of nearly 3% for the next five years.
Some emerging market countries have transformed from cheap manufacturers to leaders in new technologies and industries, opening investment opportunities in sectors with even higher structural growth. In addition, the growth of the middle class with rising disposable income is one of the most significant social trends of the 21st century. This rise in wealth is leading to strong growth in domestic consumption.
However, emerging markets can still be perceived as high risk and are therefore underrepresented in investors’ portfolios. Read on, to learn more about why you shouldn’t neglect opportunities in these growing economies.
The term "emerging market" was introduced in 1981 by the World Bank's International Finance Corporation (IFC), aiming to attract investment capital to those countries that needed it most. Foreign investment in the stock markets of developing countries was minimal at that time and did not yet play a role in supporting growth and modernization. There was a negative perception of these countries - called 'Third World' - at the time. The importance of emerging markets in the global economy has since increased significantly, and many investors are aware of their benefits.
There is no single consistent definition of an emerging market. The IMF World Economic Outlook classifies 39 economies as "advanced", based on such factors as high per-capita income, exports of diversified goods and services, and greater integration into the global financial system. The remaining countries are classified as "emerging market and developing" economies.
We believe Vontobel has the know-how and the skills to help our clients achieve their individual goals over the long term and thrive in this new world.
We are an active asset manager with global reach and a multi-boutique approach. Each of our boutiques draws on specialized investment talent, a strong performance culture and robust risk management. We offer leading investment solutions for emerging markets fixed income and equities through three of our specialized boutiques.
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