To diversify my portfo1io through overseas investments, which do you recommend: developed markets like Western Europe and Japan or emerging markets such as those in Latin America and Asia?
According to Morgan Stanley, the annual average rate of return for 1940-1993 was 17% in emerging markets and only 13% in developed markets. The highest growth rates are found in emerging markets. The P/E (price-earnings) ratio is generally lower in emerging markets (reflecting a better value).
According to Morgan Stanley, the annual average rate of return for 1940-1993 was 17% in emerging markets and only 13% in developed markets. The highest growth rates are found in emerging markets. The P/E (price-earnings) ratio is generally lower in emerging markets (reflecting a better value).
I suggest you consult your financial advisor about investing in an emerging market fund with a solid track record. Some of the possible risks of investing in emerging markets that are not encountered in U.S. funds are: fluctuation in currencies, restrictions on foreign investment, the possibility of exchange controls, less publicly available data, less liquidity, and differences in government regulation and supervision. There also may be concerns about political instability, hyperinflation, and market instability.
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