Put EM market nerves into context

EMERGING MARKETS

Austin Forey, manager on the J.P. Morgan Emerging Markets investment trust, says with some emerging markets being punished on a price basis simply by virtue of their location, investors should not forget there is still potential within the region.

If history is any guide, long-term investors should be accumulating emerging market exposure at today’s levels. Regression analysis of historical data suggests emerging markets could deliver high double-digit returns over the next 12 months. Political uncertainty and currency volatility have been flashpoints for emerging markets this year. Sell-offs initially triggered by concerns about economic stability, and the outlook for growth have been prolonged by geopolitical events. That volatility is likely to continue, given countries holding uncertain elections this year, amount to 28% of to...