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UK investors to take advantage of emerging markets

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Research by New Star indicates that 70% of investors believe emerging markets will generate superior investment returns in comparison to developed markets over the medium to long term.

The survey revealed that 90% of investors had exposure to the UK, 40% had exposure to the rest of Europe, 22% had exposure to the US and 14% had exposure to Japan.

In spite of investors’ strong belief that emerging markets will outperform developed markets over the medium to long term, just 10% had exposure to China, 7% had exposure to India, 4% had exposure to Latin America and only 2% had exposure to Africa.

Of those surveyed, more than half were considering increasing or adding exposure to emerging markets such as India and China and the countries of Latin America and Africa.

Richard Wilson, marketing director at New Star, said: “This research shows that the potential of emerging markets is well recognised yet investors remain underweight in these regions. Investors have been willing to sacrifice superior returns in the past for more familiar markets such as the UK and have, as a result, lacked balance in their portfolios. It appears, however, that investor attitudes are set to change.

“Financial advisers are in agreement with investors that emerging markets have great potential and advisers believe a market such as India should form part of a well-diversified portfolio.

“What is most evident from the two sets of research is that investors and advisers both recognise the significant changes occurring to the economic world order. Research suggests investment in emerging market funds is poised to increase and that a new breed of emerging market funds such as the New Star Indian Equity Fund and the New Star Heart of Africa Fund are well positioned to benefit from this expected growth.”

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