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For Greater Growth, Look Beyond BRICs: Fund Founder

Investing in emerging markets is nothing new. The question, during this Delivering Alpha panel discussion, is whether these markets will continue to gain momentum, or soon bust?

Jeff Titcomb | Photographer's Choice | Getty Images

Marko Dimitrijevic, CIO and founder of Everest Capital is currently heavily invested in emerging markets, for a simple reason: "Developed markets in the last five years have delivered zero, and emerging markets have been growing."

Yet the past five years is just that — passed. Are the best days behind, or will we see an acceleration?

Dimitrijevic responds, "Clearly emerging will not grow as fast as they used to. We think growth in the smaller emerging called 'frontier markets' — the non-BRICS, which now rep 20 percent of the world GDP - are now bigger than the US economy. That's where the growth is."

Everest Capital is now investing in Qatar and Bangladesh, both considered frontier markets.

Martin J. Whitman, chairman of Third Avenue Management, said "we don't buy common stocks unless they are priced at huge discounts. We [also] don't invest unless there is full and comprehensive disclosure in English."

Third Avenue Management holdings in Asia are now larger than ever.

Whitman goes on to explain, "the reason for the concentration in Asia, in my macro opinion, is that prospect for achieving double digit growth in 5-10 years is better in east Asia than any other place in the world"

Delivering Alpha - presented by CNBC and Institutional Investor
Delivering Alpha - presented by CNBC and Institutional Investor

Prospects for growth, say panelists, are evident. So, what are the risks?

On risk, Dimitrijevic says, "Given what is happening in the US and Europe now, all emerging markets will not do well. Some will do poorly on the relative and absolute basis. We focus on public and liquid securities because its important to be able to change your mind. Even though we're all bullish medium term, we want to be able to short over the long-term."

Additionally, a general concern about inflation on a case-by-case basis is raised. Yet, inflation aside, the growth prospects drive demand.

Scott Kalb, CIO, Korea Investment Corporation, is a sovereign wealth fund manager invested in emerging markets.

He says, "The most important thing about emerging markets is their current accounts surpluses. In general, we need to have a strong presence in those markets because important to have diversification. Twenty years from now, I think that emerging markets will represent 70 percent of GDP; now it is 15 percent...

You got to get ahead of that curve."