Tags: emerging | markets | individual investors

Investment News: No Need to Flee Emerging Markets

By    |   Tuesday, 27 August 2013 12:48 PM EDT

Individual investors, the little guys who often get taken to the woodshed by Wall Street's market machinations, have been sticking with emerging markets even as institutions pile out of them.

But in the long run, the little guys may end up winners in this case, according to Investment News.

The MSCI Emerging Markets Index has sunk more than 10 percent this year, while the Standard & Poor's 500 has risen more than 18 percent.

Editor’s Note:
Buy These 4 Stocks Before 399% Stock Market Rally!

However, a look at mutual fund flows, which are primarily driven by retail investors, do not match that picture. Diversified emerging market funds have had net deposits of $27 billion through July, while U.S. large cap funds, similar to the S&P 500 profile, have had net deposits of only $5 billion, according to Morningstar data.

Mom-and-pop investors often chase performance, with the result that they often pile into a sector when the smart institutional money is getting ready to leave. Not this time, apparently.

"It's refreshing to see that retail investors haven't abandoned emerging markets," Mike Rawson, a Morningstar mutual fund analyst, told Investment News. "Just because performance is bad, it doesn't mean you should sell everything."

Kristina Hooper, head of investment strategies U.S. at Allianz Global Investors, agreed with that outlook. "Investors with a long-time horizon are right on in staying the course," she said.

Kate Stalter, investment adviser at Portfolio LLC, said she has been re-balancing her client portfolios to move assets from U.S. stocks to emerging markets.

"Emerging markets have never been cheaper," she said. "It's a great time to get into some of the smaller areas of emerging markets."

Larry Swedroe, director of research at Buckingham Asset Management, also suggested investors may do better to stay the course with emerging markets, presuming they have a diversified portfolio.

Writing in a column for CBS Moneywatch, Swedroe said that "in a world where there are no crystal balls, just uncertainty, diversification across asset classes is the only prudent strategy."

According to Swedroe, volatility and poor returns should be anticipated, not just lead to panicked selling after prices have already fallen.

How to accomplish this feat of discipline? The simplest way may be for investors to rebalance their portfolios on a regular basis, Swedroe wrote.

"By adhering to your plan, you would be selling at relatively high prices (when expected returns are lower) and buying at relatively low prices (when expected returns are higher) — the 'Holy Grail' of investing," he said.

Editor’s Note: Buy These 4 Stocks Before 399% Stock Market Rally!

© 2024 Newsmax Finance. All rights reserved.


InvestingAnalysis
Individual investors, the little guys who often get taken to the woodshed by Wall Street's market machinations, have been sticking with emerging markets even as institutions pile out of them.
emerging,markets,individual investors
428
2013-48-27
Tuesday, 27 August 2013 12:48 PM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
Get Newsmax Text Alerts
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved