abrdn Asia Focus

Emerging markets (EMs) are frequently perceived as riskier than their developed counterparts. By extension, they are sometimes also thought of as inherently ‘wilder’, more unpredictable and maybe even dangerous. Does this mean the managers of funds that invest in emerging markets are uncommonly intrepid – a kind of stockpicking mélange of Bear Grylls, Sir David Attenborough and Indiana Jones? Not exactly. In reality, the notion that EM investments inevitably entail higher risk is outdated.

By Gabriel Sacks, Manager, abrdn Asia Focus plc Diversification is one of the investment world’s most important concepts. Its basic premise is that a portfolio consisting of multiple asset types is likely to perform better than one consisting of relatively few. The idea first emerged almost three quarters of a century ago, when Harry Markowitz published his groundbreaking Modern Portfolio Theory. Further research has reinforced its relevance ever since, as has a wealth of real-world experience.

One of the reasons why London is so adored by tourists is that much of it remains conspicuously old. Take a stroll almost anywhere in the capital and you will encounter evidence of numerous bygone ages. The most obvious vestiges are large in scale. For example, although they stand less than half a mile apart, the Tower of London and the Shard are separated by around a thousand years’ worth of developments in construction techniques.