Emerging Markets Offer Unprecedented Opportunities for Investors

Cape Town — In an increasingly global investment landscape, the case for emerging markets is more robust than ever, according to Lars Hagenbuch, a product specialist at RisCura, these regions. “Emerging markets are experiencing an explosion in diversity and opportunity unlike anything we’ve seen over the last decade,” Hagenbuch noted in a recent interview with Citywire South Africa. “Many of these opportunities are not available in developed markets.”

Accessing Best-in-Class Emerging Market Managers

In August 2022, RisCura launched the RisCura Emerging Markets Equity fund, which by the end of March 2024 boasted an impressive $12.5 million in assets under management. Following this, November 2023 saw the introduction of the RisCura BCI Emerging Markets Equity feeder fund, a collaborative effort with Boutique Collective Investments, now valued at R50m.

These funds, both multi-managed fund-of-funds portfolios, are part of RisCura’s strategy to harness the potential of emerging economies through active fund management.

Changing Dynamics in Global Trade

Hagenbuch highlighted significant shifts in how emerging markets operate. “Historically, these markets were focused on exporting raw materials or finished goods to developed economies. Now, we’re seeing a robust internal trade among these countries themselves, which is a dramatic shift from the past,” he explained.

A critical driver of these changes is China, the largest single market influencing numerous others due to its substantial trade and investment flows. “Chinese consumers are increasingly preferring domestic brands over foreign ones, which is reshaping global economic dynamics,” Hagenbuch added.

Investment Opportunities Amid Market Volatility

Despite recent market volatilities, particularly in China, Hagenbuch remains optimistic. “While the Chinese markets have faced significant sell-offs due to sentiment issues, the reality is that earnings are growing. Currently, we believe Chinese securities are considerably undervalued, presenting a lucrative buying opportunity,” he said.

Local Expertise Drives Fund Selection

RisCura’s strategy emphasises the importance of local knowledge. “We strongly believe in the power of local managers who inherently understand the market dynamics and have better access to critical information,” said Hagenbuch.

This approach is distinctly visible in how RisCura selects funds for its portfolio, combining extensive manager research with an on-the-ground presence in emerging markets. “Our senior team members have over 20 years of experience in manager research, which allows them to quickly identify the best candidates,” he elaborated.

Forward-Looking Investment Practices

Looking forward, RisCura continues to focus on diversification and innovative investment solutions. The largest country allocation in the RisCura Emerging Markets Equity fund is Chinese equities, comprising about 25% of both the fund and the benchmark.

“Emerging markets, especially those like India and South Korea, offer incredible opportunities despite their risks. They are becoming integral to any diversified investment portfolio,” concluded Hagenbuch.

For investors considering the vast potential of emerging markets, RisCura offers both the expertise and innovative financial products necessary to navigate these complex landscapes effectively.

Lars Hagenbuch