The study, which surveyed just over 1,000 UK adults who don’t typically use a financial adviser, found the biggest barrier to investing in emerging markets was a lack of knowledge with 58% of respondents citing this reason.
More than three in four of the respondents (77%) said they felt that adding emerging markets exposure to their investment portfolio would increase the risk, with one if four believing the risk would increase significantly.
Carlos Hardenberg, who took over control of Templeton’s £2.4bn-pound emerging markets investment trust from Mobius two years ago, said investors could be missing out on opportunities because of their misconceptions about the asset class.
He said this was significant because these markets were currently trading 25 to 30% discount to developed markets at a time when the global economy was doing well and returns elsewhere were muted.
“While many investors may dismiss emerging markets as too risky, the rewards they can deliver over time mean they should not be overlooked.
“In the current low-growth, low-yield environment, emerging markets provide investors with access to innovative, fast growing companies trading at attractive valuations,” he said.
Tech centred
The study also found what Hardenburg called some outdated perceptions of emerging markets, with half of those surveyed likening them to investments in commodities or manufacturing.
“Emerging markets are no longer driven by commodities,” he said.
“Gone are the plain-vanilla business models of the past that tended to focus on infrastructure, telecommunications, or commodity-related businesses, and in their place we are seeing a new generation of very innovative companies that are moving into technology and much higher value-added production processes.
“The technology sector in emerging markets is providing us with many interesting opportunities and we think it’s a very exciting time for investors in this space,” he said.
