Aberdeen Survey Finds Financial Advisors Remain Bullish on Emerging Markets, Despite Headwinds

Geopolitical uncertainty and expectation of rising U.S. interest rates not causing reactive investment decisions

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Oct 21, 2014, 12:05 ET

PHILADELPHIA, Oct. 21, 2014 /PRNewswire/ -- Despite ongoing geopolitical turmoil across a range of developing countries and the impending hike in U.S. interest rates that is expected to slow growth in emerging markets, financial advisors remain bullish on emerging markets.

According to a survey of more than 100 financial advisors, registered investment advisors (RIAs) and other investment industry experts, conducted by Aberdeen Asset Management at the Financial Planning Association (FPA) Annual Conference in late-September, sentiment remains positive on both emerging market stocks and bonds over the next 12 months. The vast majority of respondents (88 percent) indicated they have not reduced their clients' exposure to emerging markets because of recent political turmoil in Eastern Europe, the Middle East and elsewhere.

When presented with a range of asset classes, 41 percent of those surveyed state they are most likely to increase allocations to emerging market equities over the next 12 months. This was higher than U.S. equities (31 percent), alternatives (14 percent) and non-U.S. international developed market equities (14 percent).

"Although recent headlines can cause worry for the markets, advisors recognize that an allocation to emerging market equities over a long period of time is an important component of any growth portfolio," said Devan Kaloo, Head of Global Emerging Markets at Aberdeen Asset Management, whose team manages a number of Aberdeen's closed-end funds including the Aberdeen Emerging Markets Smaller Company Opportunities Fund, Inc (NYSE: ETF). "We believe that emerging market policy makers have learned from past crises and used their experience to strengthen strategies and governance standards." Kaloo adds, "We believe that closed-end funds represent one of the best ways to invest in emerging markets as their assets can be nimbly deployed to potential opportunities in thinly traded markets."

Similar to emerging market equities, advisors expect emerging market bonds to offer the most attractive risk adjusted returns over the next 12 months as compared to other asset classes. Nearly 40 percent (38 percent) favor emerging market bonds. This compares to U.S. high-yield bonds (24 percent), U.S. investment grade corporate bonds (23 percent) and international developed market bonds (15 percent).

The survey also found that 60 percent of advisors consider risk tolerance the most important factor when evaluating investment options for clients, to ensure that investors have a realistic understanding of their ability to tolerate large swings in the market. Other important factors considered by advisors when determining asset selection include clients' investment time horizon (32 percent) and fund expenses and fees (8 percent).

About Aberdeen Asset Management:
Aberdeen is a global asset management group. Formed out of a management buy-out in Aberdeen, Scotland, in 1983, Aberdeen is a FTSE 100 company operating on-the-ground in over 23 countries across Europe, Asia and the Americas.

The Group is defined by its focus on asset management, including equities, fixed income, property and multi-asset portfolios. All investment solutions are driven by its commitment to straightforward, transparent investment approaches that stress intensive, first-hand research and a long-term view.

As of August 31, 2014, Aberdeen Group managed assets of US$550.0 billion for both institutions and private individuals.

Aberdeen Group is the world's largest manager of emerging market closed-end funds offered around the world by both value and number ¹. For more information on Aberdeen's closed-end funds available to U.S. investors, see Aberdeen-asset.us/cef.

Further information about Aberdeen can be found at www.aberdeen-asset.us and www.aberdeen-asset.ca in Canada.

In the United States, Aberdeen Asset Management (AAM) is the marketing name for the following affiliated, registered investment advisers: Aberdeen Asset Management Inc., Aberdeen Asset Managers Ltd, Aberdeen Asset Management Ltd and Aberdeen Asset Management Asia Ltd, each of which is wholly owned by Aberdeen Asset Management PLC. "Aberdeen" is a U.S. registered service mark of Aberdeen Asset Management PLC. Aberdeen Asset Management ("AAM") is the marketing name in Canada for Aberdeen Asset Management Inc.

In Canada, AAM is the marketing name for Aberdeen Asset Management Inc., Aberdeen Fund Distributors, LLC, Aberdeen Asset Management Asia Ltd and Aberdeen Asset Management Canada Limited. Aberdeen Asset Management Inc. is registered as a Portfolio Manager in the Canadian provinces of Ontario, Nova Scotia, and New Brunswick, and as an Investment Fund Manager in the Canadian provinces of Ontario, Quebec, and Newfoundland and Labrador. Aberdeen Asset Management Asia Limited and Aberdeen Asset Management Canada Limited are registered as Portfolio Managers in Ontario. Aberdeen Fund Distributors, LLC operates as an Exempt Market Dealer in all provinces and territories of Canada. Aberdeen Fund Distributors, LLC and Aberdeen Asset Management Canada Limited are wholly owned subsidiaries of Aberdeen Asset Management Inc.

¹Fund Consultants LLC, February 2014. Based on analysis of emerging market closed-end funds offered in multiple jurisdictions as of December 31, 2013; data provided by Morningstar Inc.

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SOURCE Aberdeen Asset Management Inc.