Good Emerging Market Equity Commentary from GMO

Beyond the quarterly piece put out by Jeremy Grantham, some other analysts at GMO also produce good work.

A piece posted today on how best to capture emerging market equity growth is a good example of this.  It is worth a look.

We caution clients to understand that, even with good GDP growth prospects in some emerging market countries, GDP growth is not necessarily a good indicator of future stock market returns.  Keep in mind that emerging market equities are likely to be much more volatile than more developed markets.  You also need to watch valuation closely.

SJM agrees with GMO’s conclusion, which can be accessed through the link below.  If you are going to allocate assets to EM equites, focus on buying true domestic demand versus proxies.

GMO – Capturing Domestic Demand in Emerging Markets – Neither Small Caps Nor Multinationals Are A Good Proxy

Please check our Idea Flow section for more links to some of the research and commentary we find useful.

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