Page 6 - DIY Investor Magazine - Issue 26

EMERGING MARKETS 2020: PART 1 - EXPERIENCE AND EXPERTISE NEVER MORE NEEDED
Discover how the J.P.Morgan Emerging Market Investment Trust’s experience and expertise enable it to cut through the noise and focus on the fundamentals.
In the current environment an approach based on proven experience and expert analysis of the growth potential of individual stocks is essential for investing successfully in emerging markets.
To the uninitiated, emerging markets may seem a difficult area in which to invest in the second half of 2020. But despite concerns that COVID-19 fallout has slowed capital flows to emerging markets, long-term investors focusing on the right portfolio of stocks still have reasons to be positive.
Aside from the effect of the pandemic, concerns around US- China relations, falling earnings and currency weakness may be off-putting for investors, but it’s important not to let the short- term noise drown out medium to longer-term thinking. A clear focus on evidence-based stock selection, targeting strong fundamentals and long-term growth potential, will continue, in our opinion, to drive gains.
With veteran Lead Portfolio Manager Austin Forey and his team at the helm, the JPMorgan Emerging Markets Investment Trust continues to make the most of the long-term potential the best emerging market companies have to offer.
THE CHANGING FACE OF EMERGING MARKETS
If you still think of emerging markets as being about commodities, banks and property companies, then think again. While a country like China once based its economic growth model on a capital-intensive, infrastructure-driven model, the structure of emerging markets has transformed over recent years.
‘People who still think about EM as a commodity-dominated asset class are very much stuck in the last decade,’ says Investment Specialist Emily Whiting.
‘These days commodities are barely touching double digits as a percentage of the Emerging Markets Index; I remember back in 2007-2008 they made up around a third of it.’
‘There’s been a very significant change in the past 10 years towards businesses which create value without needing capital to do so,’ says Whiting.
‘One of the most interesting things about emerging markets today is that the kinds of business models that have been so successful for shareholders in the US over the last 20 or 30 years are now much more widespread in emerging markets.
For example, social networks, consumer brands, software and e-commerce companies.’
The JPMorgan Emerging Markets Investment Trust portfolio is notably and deliberately tilted towards these types of low capital intensity, high-growth businesses which benefit from a huge potential market.
DIY Investor Magazine | Dec 2020 6