Investors are looking to invest internationally in 2011 and beyond, a sign that positive sentiment in emerging markets is growing, according to a survey released on Tuesday by Franklin Templeton.
The survey of 13,076 respondents in 12 countries found that 62% of U.S. and global respondents plan to invest in international markets, including Brazil, Chile, Mexico, and India, over the next ten years. Yet just 34% of respondents are currently investing outside of their own markets. At the same time only 33% believe their own country's market will perform better than the rest of the world in 2011, said Franklin Templeton, which shows a willingness to consider opportunities globally.
“With an improved global economic outlook, investors are increasingly looking worldwide for investment opportunities. A diversified portfolio today is no longer just a mix of asset classes, but also a mix of geographies,” said Greg Johnson, president and chief executive officer of Franklin Templeton Investments, in a statement. “As people, businesses and economies around the world become increasingly connected, we can expect to see a rise in trade and consumption and the expansion of stock markets over the next decade and beyond. Savvy investors are watching these trends and making investment decisions based on the growth potential they see globally.”
Sixty two percent of U.S. survey respondents believe the U.S. stock market will move higher in 2011, but only 27% believe it will perform better than global stock markets.
While 73 percent of U.S. respondents said that the best opportunities will lie in both the U.S. and global markets over the next 10 years, just 40% of Americans currently have investments outside the U.S. market, a sign that there is a gap between belief and action.
The global financial meltdown has clearly had an impact on investor perceptions. Forty nine percent of American respondents said they believed the U.S. stock market was either down or flat in 2010 when the S&P 500 Index recorded a gain of 15.06 percent in 2010, according to Franklin Templeton. Meanwhile, most Americans believe the global markets outperformed the U.S. stock market in 2010, but that was not the case. While the MSCI Emerging Markets Index recorded a 19.20% gain, the S&P 500 Index recorded a gain of 15.06%, which exceeded the 9.43% gain for rest of the world on the MSCI World ex USA Index last year, reported Franklin Templeton.
“The market decline of 2008 and early 2009 is continuing to influence perceptions of recent stock market performance. The survey tells us, however, that respondents recognize the importance of equity investing going forward. About three in five U.S. respondents (59 percent) don't think they will be able to meet their long-term investment goals without investing in stocks,” said David McSpadden, senior vice president of Global Advisory Services for Franklin Templeton Investments. “We believe that if investors focus on the longer-term opportunity provided by equities, the case is very compelling, and looking globally for those investments is a key to building a diversified portfolio.”
Investors living in Asia and Latin America overwhelmingly believe the best investment opportunities over the next 10 years will be found in emerging markets. About half of Europeans favor emerging markets, while in North America, which includes the U.S. and Canada, only 37% believe emerging markets will provide the best returns in the next ten years.