Why investing in Emerging Markets could be a good opportunity in 2024

Emerging markets have underperformed their developed counterparts for around a decade, with the trend continuing in 2023 despite the robust economic growth1. It is a highly diverse region and in many cases the central banks were quick to tackle inflation, with several having already started to cut interest rates, which should help to support the local stock indices going forwards.

Investing in emerging markets is never without risk, but government borrowing is typically more modest than in developed markets, making it easier for the public sector to take action if required. Another factor in their favour is the recent fall in the value of the dollar, the currency in which much of their debt is denominated.

The region is currently trading at around a 45% discount to developed markets2, so it could be considered a good buying opportunity. Long-term investors who are comfortable with the volatility might want to consider increasing their allocation via one of the specialist funds that provide exposure to the area.

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.

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