Why passive flows could mean opportunity for active managers

ON EM

The lion's share of assets in emerging market equities are held in passive investments. But this trend could throw up opportunities for active managers, argues RAM Active Investment's Emmanuel Hauptmann.

An investor in global developed markets ended the year up 26% while an investor in MSCI Emerging Markets ended the year down more than 2% in 2013. This is the largest relative under-performance of emerging markets in the last ten years. The regaining of growth in the US, Europe and Japan justify their positive momentum, relative to emerging markets currently in rebalancing and slowdown mode. But it is surprising to witness so much risk-aversion in emerging markets today, and so little in developed markets. Valuations in emerging markets have rarely been as attractive as today, relativ...