Invest with care in emerging markets

AFTER more than a decade as a global market darling, emerging market equities and bonds have suffered a humbling comeuppance. Over the past three years, returns have turned negative; the broader MSCI Emerging Markets Index has been relatively resilient with an annualised loss of 3 per cent, compared with a loss of more than 9 per cent per annum for Latin America.

Not surprisingly, some are raising the question of whether the structural growth story that had long underpinned expectations for emerging assets is finally over. For now, among investment strategists, the consensus view remains in favour of developed markets such as the US and Europe, and to give emerging markets a miss. There are a few reasons for this view, foremost of which is that a tapering of quantitative easing (QE) measures - widely expected by the f…