Where should investors have structural overweights in EMs?

The gloss has come off the emerging markets' story in the past year or so. Performance has disappointed, and of the BRIC countries, only India appears to be a story investors want to talk about positively.

The commodity cycle is hurting economies reliant on primary industries, while low demand growth in Europe (and China) further affects exporters' markets. The de-coupling argument fashionable in the run up to the financial crisis is dead and, while there are many fine companies and governments in these markets, it is not true to say that standards of corporate and state governance are the equivalent of the developed markets.   The valuation and performance of the emerging regions' stock markets reflects a new investor caution over growth and recognition that higher risk should carry hi...