Emerging Markets Are the Craze

Michael Johnston submits:Frustrated with the diminishing prospects for growth in the developed world, investors have flocked en masse over the last two years towards red hot emerging markets that now account for the vast majority of global GDP growth. As interest in emerging markets equities has jumped, so too have the options for U.S. investors looking to gain exposure to this asset class.

After his departure from UBS, Andy Lees went radiosilent while setting up his own research company, AML Macro. We are now happy to be able to bring to our readers' the occasional report from Lees, who has traditionally been one of our favorite macro analysts, and whose insights are usually months ahead of the maintstream. Emerging Markets Unable To Continue The Heavy Lifting AML Macro Limited

In a zero interest rate environment, we can think about market participants in two groups: Those who are taking risk because they can. Those who are taking risk because they have to. These are not the traditional buckets. Normally the dividing lines run retail versus institutional… investor versus trader… value versus growth or what have you.

IT’S not a fashionable view, but I don’t have a huge problem with state and local pension plans that assume an 8% return on their assets. Whether 8% is too high depends on how the states invest their assets. If they’re invested entirely in a very risky portfolio, something highly levered and in emerging markets, that’d be a conservative estimate. I am beginning to wonder, however, whether a fixation on expected return does more harm than good. An exclusive focus on return encourages greater risk-taking; higher return is, after all, compensation for risk.

Daniel Broby submits:Whilst most asset allocators are making cautious predictions for 2011, some are calling for increased allocation to those emerging markets left behind by the BRIC euphoria. In particular, new emerging markets, or frontier markets, are fast becoming an investment theme in their own right. Frontier markets represent some 4% of global GDP, around $2.5 trillion when combined.

Michael Johnston submits:Van Eck announced on Wednesday the latest addition to its ETF product lineup, rolling out the Market Vectors Small Cap India ETF (SCIF). The new ETF will seek to replicate the performance of the Market Vectors India Small-Cap Index, a benchmark that includes about 120 constituents with an average market capitalization of approximately $450 million.

We are happy to present yet another guest feature by our by now regular contributor Dr. Sam Subramanian from alphaprofit.com: Emerging Markets: Investment Choices and Risks Sam Subramanian During the global recession, equities in emerging nations declined more than those in developed nations. From its high in 2007 to the low in 2008, the iShares MSCI Emerging Markets Index Fund (EEM) declined 67% compared to the 62% decline in iShares MSCI EAFE Index ETF (EFA).

Market Folly submits:We've recently seen some performance numbers from some of the top dogs in the global macro hedge fund game. And, it's not what you'd expect. After all, these funds typically have free rein and can trade in interest rates, currencies, futures and sovereign debt... areas ripe with opportunity given the ever-changing dynamic of global economies.