A look at emerging markets on the other side of the pandemic
Emerging markets can be a wonderful portfolio diversifier for Canadian investors. You could also consider the equity ETFs and the bond side.
In this area, I suggested investors give Emerging markets a look on many occasions, including this November 2020 post. From a Forstrong Global Asset Management report cited in this post …
“Today, many investors are experiencing their own existential struggle with the economic rise of the emerging markets of Asia. On the one hand, the region – which we classify in China, India, Taiwan, Korea, Indonesia, Malaysia, the Philippines, Thailand and Vietnam – has created enormous growth worldwide. China alone has generated around half of global GDP growth in the past ten years. This was a crucial pillar for a growth deficient world. “
And here is a very good one Introduction to Emerging Markets, courtesy of Pimco. I recommend you read this.
From this blog post …
“With an expected wave of reopenings sweeping across developing countries, random external momentum could fuel the post-pandemic recovery of the emerging market asset class. After an annual recovery of 68%, a broad commodity price index (Commodity Research Bureau) has returned to a level not reached since mid-2015 – a potentially important economic factor for the many emerging countries that are dependent on commodity exports. Also, US real short-term interest rates have recently fallen to a 50-year low, a situation that is likely to aid EM investment by stimulating capital flow to developing countries while investors seek return. “
We’ve often discussed commodities and REITs as inflation-friendly assets, but certain equity markets (like those in many emerging markets) can offer another level of inflation and currency hedging.
For some ETF options for global and emerging market stocks, see the The best ETFs in Canada for 2021.