Emerging Market Myths

According to research by Templeton Emerging Markets Investment Trust investors could be missing out on the emerging market opportunities because of misconceptions about emerging markets.

Key misconceptions included:

Read on to find out if any of these misconceptions might be affecting the way you think about emerging market investing.

MISPERCEPTION

Emerging markets are risky

REALITY

Adding emerging markets exposure can potentially diversify a portfolio and reduce risks

77% of respondents think that adding emerging market exposure to an investment portfolio increases risk

"Whilst many investors may dismiss emerging markets as too risky, the rewards they can deliver over time mean they should not be overlooked. In the current low-growth, low-yield environment, emerging markets provide investors with access to innovative, fast growing companies trading at attractive valuations."

MISPERCEPTION

Volatility is not beneficial for investment portfolios

REALITY

Volatility provides opportunity for active managers

50% of investors agree that volatility is beneficial for portfolios

However, 29% do not think it is good for investment portfolios

"Despite the higher growth rates of emerging markets compared to developed-market economies, valuations generally appear much more reasonable. You can invest in many emerging market companies at a price that is a significant discount to an equivalent business in the developed world. And, because of their low correlation with each other and with developed market stocks, they offer investors better diversification."

MISPERCEPTION

Investors know what an emerging market is

REALITY

Investors can only identify famous emerging markets

Research shows investors can easily identify some of the most famous markets as emerging whilst there is some confusion over less famous markets

MISPERCEPTION

Emerging markets are all about commodities

REALITY

Information Technology and Financial Services now form the biggest part of the MSCI Emerging Markets index

Over half 56% of investors still associate commodities with emerging markets

"Emerging markets are no longer driven by commodities; the business models that focused on infrastructure, telecommunications, or commodity-related businesses have gone. Instead, the technology sector in emerging markets is providing us with many interesting opportunities and we think it’s a very exciting time for investors in this space."

MISPERCEPTION

Emerging markets do not drive innovation

REALITY

Over half of global patent applications are now registered in emerging markets

Over half 53% of investors believe the largest number of global patents are registered in the US

"Emerging markets are no longer driven by commodities; the business models that focused on infrastructure, telecommunications, or commodity-related businesses have gone. Instead, the technology sector in emerging markets is providing us with many interesting opportunities and we think it’s a very exciting time for investors in this space."

Important Information

Source: research conducted by Opinium Plc on behalf of Templeton Emerging Markets Investment Trust between 31st July to 4th August 2017.

This document is intended to be of general interest only and does not constitute legal or tax advice nor is it an offer for shares or invitation to apply for shares of the Franklin Templeton Funds (a UK-domiciled OEIC), (the “Fund”) or Templeton Emerging Markets Investment Trust (“TEMIT”). Nothing in this document should be construed as investment advice.

The value of shares in, or the income received from, the Fund can go down as well as up, and investors may not get back the full amount invested. Past performance is not an indicator or a guarantee of future performance.

Issued by Franklin Templeton Investment Management Limited, Cannon Place, 78 Cannon Street, London EC4N 6HL. Authorised and regulated by the Financial Conduct Authority. Telephone: 0800 313 4049, Email: ftisalessupport@franklintempleton.co.uk.