Should income seekers be turning to EMs?

The dearth of value opportunities in Western equity markets alongside a host of other issues leaves emerging market equities as the last man standing. Should income seekers change their focus?

During the past two years, US equities have outperformed a rising market, which is not something they usually do. With valuations at current levels, US equities may not be a defence in a downwards market, as they usually would be. Monetary tightening fears, earnings disappointments, geopolitical issues or weak macroeconomic data could all act as headwinds for the US equity market. In Europe, equity valuations do not look particularly attractive either, and are certainly not impressive on an earnings basis. But given profitability still remains depressed following the financial crisis,...