Better approach for emerging markets needed

Superannuation funds should do better than accepting emerging market investing deficiencies, Parametric believes.

The fund manager said super funds needed to avoid under-diversifying, prioritise country selection, stay unhedged, focus on implementation, and favour transparency to avoid the pitfalls of investing in emerging markets.

Parametic Australian managing director for research, Raewyn Williams, said many emerging market fund managers were capacity-constrained, so as super funds looked for new managers and strategies it was worthwhile revisiting what made for an effective exposure to these equity markets.

Williams noted that there were well-known deficiencies with traditional active and passive approaches to emerging market investing.

VIEW ALL

View all

"In the past, it seems that many super funds have just been content to accept these deficiencies as part and parcel of investing in these markets," she said.

"Super funds owe it to their members to do better than this and should look for an approach that seeks to capture the best of active and passive strategies while bypassing the negatives."