Big funds cautiously raise allocations to cheap emerging stocks

viernes 6 de noviembre de 2015 11:39 GYT
 

* Emerging stocks lagged developed markets in past 5 years

* Convincing reversal still some way off

* But emerging funds began drawing new money in mid Oct

* UBS cites attractive valuations, signs economies stabilising

By Sujata Rao

LONDON, Nov 6 (Reuters) - After several false dawns in emerging market equities, some big asset managers reckon it could be time to start buying even if the sector's recent rally looks fragile.

Once-booming emerging markets have underperformed their developed peers for five years running. Investors who bought into the sector five years ago would be sitting on a 6 percent loss now if they tracked MSCI's benchmark index. By contrast, an investment following the U.S. S&P500 would have returned 13 percent, asset manager Blackrock notes.

A convincing reversal on emerging markets is still some way off. Morgan Stanley data showed this week that companies in the sector will miss analysts' earnings forecasts for the 12th quarter out of the past 14. Many big emerging economies such as Brazil and Russia are in recession while growth in others has slipped to multi-year lows.

Nevertheless, some funds are cautiously upping their allocations. UBS Wealth Management, for instance, has gone neutral weight on emerging markets after being underweight for more than a year. That means its allocations are now on par with emerging stocks' weight in world benchmark indexes.   Continuación...