Retail investors and the EM story
A new survey of retail investors reveals that 27% of retail investors claim to have over 20% of their investment portfolios in emerging market investments.
Some 6% say they have over half invested here. Similarly, when asked about their clients, financial advisers said that 14% of their clients have a quarter or more of their portfolios in emerging market equities and debt.
The findings are from the online investment platform Rplan.co.uk, which offers retail investors access to over 2,000 funds as well as pre-selected investment portfolios based on levels of risk, but it warns that many investors may have been taken in by the market hype around these asset classes over the past few years without understanding the level of risk involved here.
Rplan.co.uk’s research reveals that there around 135 emerging market funds being promoted to retail investors in the UK, and 96% have the two highest risk rankings of six and seven, which means annualised volatility of 15% – 24.99% or over 25% respectively.
Stuart Dyer, Rplan.co.uk’s CIO, said: “Emerging markets have been flavour of the month in the investment world for many years and the marketing literature has really pushed the potential upside here, but there has not been enough focus on the risks involved, which can be substantial. Good examples of this include the crisis between Russia and Ukraine, in the Middle East and in parts of Latin America.
“As well as providing access to well over 2,000 funds for retail investors, we also have four pre-selected portfolios with different levels of risk and our ‘higher risk’ and ‘significant risk’ portfolios have only 6.5% and 11% exposure to emerging markets respectively.”