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These GEMs should be considered

As a South African, the thought of investing in other emerging markets may seem counterintuitive because most of your money might already be invested in an emerging market.

However, there are many reasons to consider seeking dedicated, actively managed exposure to global emerging markets (GEM) outside of South Africa.

This is according to Bernard Wessels, an investment specialist in the personal investments team at Coronation.

“For a start, the GEM investable universe is not a homogenous grouping of countries and companies. It is vastly broader and deeper than the South African universe and offers a myriad of opportunities to achieve exposure to sectors not well represented here,” he says.

“This include e-commerce and education amongst others. In addition, South Africa is different from your “typical” emerging market. It has more developed market characteristics and lower growth expectations than many of the other countries in the GEM universe.”

Wessels says that even then, you may ask: don’t I get exposure to GEM opportunities in a global equity fund?

“In reality, emerging markets are chronically underrepresented in these portfolios. Global equity benchmarks typically devote about 87% of their exposure to developed markets and 13% to emerging markets, when the global economic reality is that emerging markets comprise more than 80% of the global population and more than 50% of global GDP.”

Another concern for potential investors is whether investing in emerging markets will expose them to too much currency risk. “Again, the GEM universe is highly diverse, and not all currencies exhibit the same volatility and weakness.

“Thus investing across the GEM universe gives investors exposure to a diverse mix of largely stable currencies as the aforementioned countries make up approximately 64% of the GEM universe.”

Wessels says GEMs represent some of the fastest-growing economies and middle classes in the world. “However, global equity funds largely ignore or typically under research some of the most exciting and fastest growing GEM investment opportunities.

“Active asset managers with exten­sive experience in the full GEM opportunity set can thus add significant value to South African investors who are looking to gain exposure to the best opportunities in the emerging market universe.

  • Wessels will take part in the online Wealth Conference that will take place today (10/09) at 18:00.

The webinar is presented by Central24, Jenwil BlueStar Financial Advisory Services and Glacier by Sanlam.

Rocco Carr, from Glacier, will have a discussion with Wessels on emerging markets.

Jenwil’s investment specialists will look at the possibility that the government can take over pension funds.

Theo Venter from the North-West University will continue the talk that he started during the webinar on Thursday (03/09) about South Africa’s political future and the impact that it will have on the economy as well as issues that were influenced by Covid-19.

Book to attend the webinar at mailchi.mp/jenwil.co.za/welvaart­kongres. Dial 051-447-0463 or send an email to office@­jenwil.co.za.

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