UK retail investors to increase emerging markets exposure, Dragon Capital says
13 March 2023 UK
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34 per cent of UK retail investors expect to invest in emerging markets over the next year, according to recent research from Dragon Capital. 32 per cent predict that emerging and frontier markets’ growth will surpass that of developed markets within five years.
Of the 34 per cent, only 3 per cent plan to reduce their emerging markets exposure. 21 per cent anticipate a slightly increased allocation, and 6 per cent a drastic increase. 7 per cent will be first-time investors in the markets.
Currently, only 19 per cent of those surveyed are invested in a fund with exposure to emerging and frontier markets. 39 per cent of these self-invested in the fund after finding it themselves, and 37 per cent invested on the recommendation of a financial or professional advisor or wealth manager.
According to the research, interest in these markets comes from the belief that they are currently undervalued, are growing in stability and will benefit from the “technological revolution”.
Those surveyed cited clear, low-cost fees and a strong track record as the most important factors considered when choosing a fund, followed by liquidity and a focus on ESG, longevity and corporate governance.
Dien Vu, portfolio manager of Dragon Capital’s investment trust, Vietnam Enterprise Investments Limited, says: “Investors have been dramatically increasing their exposure to emerging market equities as falling global inflation and the reopening of China’s economy has helped to reverse the slide in this asset class last year.
“UK investors can clearly see many benefits within emerging and frontier markets and it’s encouraging that so many are acting on this to capitalise on future growth potential.”
Of the 34 per cent, only 3 per cent plan to reduce their emerging markets exposure. 21 per cent anticipate a slightly increased allocation, and 6 per cent a drastic increase. 7 per cent will be first-time investors in the markets.
Currently, only 19 per cent of those surveyed are invested in a fund with exposure to emerging and frontier markets. 39 per cent of these self-invested in the fund after finding it themselves, and 37 per cent invested on the recommendation of a financial or professional advisor or wealth manager.
According to the research, interest in these markets comes from the belief that they are currently undervalued, are growing in stability and will benefit from the “technological revolution”.
Those surveyed cited clear, low-cost fees and a strong track record as the most important factors considered when choosing a fund, followed by liquidity and a focus on ESG, longevity and corporate governance.
Dien Vu, portfolio manager of Dragon Capital’s investment trust, Vietnam Enterprise Investments Limited, says: “Investors have been dramatically increasing their exposure to emerging market equities as falling global inflation and the reopening of China’s economy has helped to reverse the slide in this asset class last year.
“UK investors can clearly see many benefits within emerging and frontier markets and it’s encouraging that so many are acting on this to capitalise on future growth potential.”
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