Emerging markets not for the fainthearted

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Investors looking at emerging markets should adopt a measured approach, according to a new report.

Lonsec has released its annual Global Emerging Markets and Regional Equities Sector Review, showing that emerging markets outperformed Australian equities for the year to June 2015, the first time this has occurred since 2010.

Asian equities delivered 15% in 2014 and 27% for the year to 30 June 2015. Indian equities also saw strong returns, delivering 35% in 2014 and 27% for the year to 30 June 2015. But Brazil and Russia saw weakness in the commodity cycle, falling currencies and political tension.

“Sentiment for emerging markets is weak due to concerns about the impact of predicted rate rises in the US, broad currency volatility thanks to a rising Greenback and concerns about China’s ability to manage its economic slowdown,” Lonsec senior investment analyst and principal report author Steven Sweeney said.

“Retail investors and their financial advisers should consider a measured allocation to emerging markets with exposure to higher performing economies, such as Asia, from a long term perspective,” he said.