GSAM's Koch: Avoid 'suboptimal' trackers when building EM exposure

Backward looking index

Investors should avoid emerging market ETFs as they are too heavily weighted towards backward-looking commodity and state-controlled companies, according to Kathryn Koch, global head of client portfolio management at Goldman Sachs Asset Management (GSAM).

Koch (pictured) said it is "as good a time as any" for investors to begin rebuilding their emerging market exposure, but added secular growth trends in domestic markets currently offer the best upside as the region continues to move away from export-led economies. With government data showing that China's average annual salary per capita in urban regions has risen from 15,920 yuan in 2004 to 56,360 yuan in 2014, Koch said the country provides the best example of a "new emerging market economy". "ETFs are a suboptimal way of increasing emerging market exposure, especially in China," sh...