Doubling up? GEM managers ramp up exposure to developed markets

Buyers fear increased stock-specific risk as active EM funds run high weightings to developed markets.

Fund buyers have cautioned on some of the largest emerging market funds in the sector as the managers raise their allocations to developed market stocks. Some of the largest funds in the IMA Global Emerging Markets sector have increased their allocations to UK and US-domiciled equities substantially – taking weightings well above 10% of their portfolios this year. They argue valuations in domestic markets are more attractive at current levels. Among them, First State Global Emerging Markets Leaders now has 15% invested across five developed countries, according to Morningstar. The ...