The past five years have marked a period of growth for emerging market allocations in client portfolios. Four in 10 respondents report that they are investing more of their clients’ assets in emerging market equities than they did five years ago, while nearly half (48%) have remained unchanged. Only 13% of respondents reported lower allocations compared to five years ago.
Advisors expect this trend to continue to gain momentum over the next five years as well. Nearly half (48%) indicate they expect emerging market allocations to rise further over that time period.
Advisors expect to allocate more of their clients’ portfolios to emerging markets equities for a variety of reasons. For starters, they see high growth potential and attractive valuations in these markets. Advisors are also optimistic that a post-pandemic economic recovery will improve market conditions throughout developed and emerging markets.
Tactical considerations play a role as well. Some advisors indicate they see more room for growth in emerging markets compared to domestic U.S. markets. Further underscoring this optimism, only 3% of advisors express any expectation that their clients’ emerging market allocations will decrease in the next five years.