Macroeconomic uncertainties in the U.S. are driving up market volatility in developed countries, making emerging markets a smart play for risk-averse investors.
Volatility is typically higher in emerging markets than in developed countries, but the trend has been reversed in the past few months.
“For the year-to-date period, we’ve seen EM volatility lower than [it is in] developed markets,” said Melissa Brown, managing director of applied research at Qontigo. In the last month, the volatility in EM countries has dropped, and it’s now about 25 percent lower than the swings in developed markets, the biggest gap between the two camps since 2006, according to data from Qontigo. Emerging market currencies have also seen a low level of volatility in the current market down cycle, a signal that developing countries are in better health than they were in prior drawdowns.
Fidelity Emerging Markets Limited (LON:FEML) is an investment trust that aims to achieve long-term capital growth from an actively managed portfolio made up primarily of securities and financial instruments providing exposure to emerging markets companies, both listed and unlisted.
