Be careful what you risk for

The Global Emerging Markets sector was the bestselling IMA Sector in October, with net retail sales of £336m, the highest month on record for the sector, against a backdrop of net retail sales for the month of £2bn.

Despite these figures, the average retail investor has around only 2% exposure to emerging markets within their portfolios. Now the reason for that is clear – namely, the perception of emerging markets is they are ‘risky’, however that word is defined. This understanding of risk is built on a historical impression of how these countries have performed in economic terms – in terms of sovereign default, or in more recent years of political interference by the governments of some of these economies. This interference is most readily exemplified by the Russian government taking control...