Source Businessday
Investors and market strategists are betting on a rebound in frontier markets like Nigeria which have sold off aggressively this year.
Heidi Richardson a global investment strategist at BlackRock Inc. expects stocks to climb in Kenya and Nigeria. “For longer-term investors, I like the frontier markets very much,” San Francisco–based Richardson says, singling out Argentina, Kuwait and Nigeria as well as Kenya. “Those are the truly emerging of the emerging markets.”
Exchange-traded funds are an easy way into those four markets, Richardson says, although she cautions that the liquidity is critical. Investors who have been out of the broad emerging markets should build up there first. “Valuations of emerging markets haven’t looked this attractive, on a relative basis, in the last 10 years,” she says.
Among developed markets, the U.S. and Japan are the best bets, while Europe will struggle, Richardson says.
Within the U.S., she recommends a tilt toward extra-large companies that tend to pay high dividends and are more resilient in a time of market gyrations. “Managing volatility is going to be an important consideration,” she says.
Within the ETF market, a notable trend has been the use of fixed-income funds by institutional and retail investors. Bond ETFs can provide a “parking space” when moving money between managers and strategies.
A veteran of marathons on seven continents, Richardson says running and investing have something in common. “If you can pace yourself and be disciplined, then you’ll easily finish the race,” she says.