Emerging markets have performed well and remain an enticing, and under-owned, owned asset class despite their strong earnings and attractive valuations, a major asset manager said on Tuesday.
Sean Taylor, chief investment officer for APAC at Deutsche Asset Management, told CNBC's "Street Signs" that optimism is here to stay when it comes to emerging markets — at least for the next three years.
"We've actually seen quite a decent synchronized global recovery, particularly in trade coming through. If that is sustainable, EM is in a very good position particularly, if some of the bottom-up reforms continue," he said.
"In the debt space, we're very selective. We prefer hard currency. In equities, we prefer Asia over Latin America and EMEA. Within Asia we are overweight China and Korea, neutral on Taiwan and India," he added.
In fact, some of the top performing stock markets this year have included Brazil's Bovespa, which has risen nearly 14 percent year to date. Indonesia's benchmark Jakarta composite, one of the outperformers for 2016, is also up nearly 7 percent.
As U.S. interest rates rise, investors need to look overseas to generate returns. The average emerging market ETF is up about 5 percent so far this year, overtaking even the best performing U.S. treasury ETFs.