According to Strategic Insight’s latest report, “Emerging Market Bridges: All Eyes on Asia and Latin America for Fund Managers and Private Banks,” local developed markets will continue to struggle for the foreseeable future, and investment professionals should look to the growth centers of Asia and Latin America to drive performance.
“Quarterly earnings results from Credit Suisse, Julius Baer, HSBC and UBS contrast strong gains from emerging markets, to private banking and wealth management with stunted progress in Europe and the U.S.,” said Daniel Enskat, head of global consulting at Strategic Insight.
“Asia local inflows in the first half of 2011 are more than double those of local Europe, with $11 billion year-to-date in fixed income flows alone,” Enskat added. “Top-selling themes include high-yield, Australian dollar, Renminbi and convertibles, with ongoing demand for real estate products from Japanese investors. Similarly, Latin America has seen strong flows to fixed income, with $30 billion in 1H11 bond fund flows in Brazil alone, and strong growth across asset classes for international fund managers in the cross-border markets of Chile, Peru and Columbia.”
By contrast, fears over sovereign debt in Europe prompted $12 billion year-to-date in outflows from locally domiciled fixed income funds. Fortunately, these outflows were largely balanced out by inflows to European balanced and alternative strategy funds, noted Jamie Maak, senior research analyst at Strategic Insight.