The media is finally picking up on the fact that Emerging Markets have been greatly under-performing the US over the past several years. Here is some coverage yesterday on the topic.
I recently wrote about this topic myself. I happen to believe that decisions on global investment allocation are a crucial aspect to portfolio construction these day.
This wasn’t necessarily the case 100 years ago when so much business was domestically contained. Companies would produce, employ and sell all in the US. Now this is no longer the case. As I wrote in my first blog post, portfolios have to evolve. They just have to do it patiently.
But back to the media’s treatment
Emerging Markets have been under-performing for three years, but the for the most part the media has treated this as a non-issue. The general sense I get is that investors have clung to the belief that this under-performance by Emerging Markets would soon reverse itself, so why even bother discussing it.
Now, after three years of under-performance, I think we are starting to see that attitude change. A sense seems to be growing that the under-performance in Emerging Markets is more of longer term trend. The US seems to be getting its act together. Foreign markets appear to have a lot of challenges and growing pains to endure. At least, this is beginning to become the narrative espoused by the financial media.
But it’s not just the financial media. It is also the sense I get as I talk to clients and other industry colleagues. Frustration is starting to grow with Emerging Markets investments, while at the same time, investors are becoming very pleased with their domestic investments.
If this trend continues a little longer, I suspect investors and the media will start to really despise their Emerging Markets investments. Hmmm…I wonder what will happen at that point….?
Photo by NatalieMaynor