The recent launch of Terry Smith's Fundsmith Emerging Markets (FEET) vehicle looks particularly well-timed. Broadly speaking, emerging market (EM) equities have lost over a third of their value relative to developed market indices since their high-water mark at the end of 2010, but evidence suggests that market sentiment is turning - perhaps decisively.
The latest quarterly 'Investment Barometer' from Baring Asset Management indicated that 55 per cent of the industry professionals it surveyed believe their clients should increase their exposure to EM equities. That's up 14 percentage points from the previous quarterly reading, with a quarter of the respondents describing their outlook as "very favourable".
The Barings findings are echoed in a note published by JPMorgan Cazenove's European equity research team, which highlights the prospect of improved EM equity valuations on a stronger global growth outlook. Analysts from the investment house estimate that EM equities now trade at a 28 per cent discount to developed markets. If, indeed, we have passed an inflection point for markets, the discount on offer represents a very attractive point for investors, but it could narrow rapidly if recent inflows into EM-backed derivatives are anything to go by.