And my dad put the majority of investments in “Canada” and “US”, which… are in the group of economies represented by the lower lines. (And the rest in “world”, which is the average of the low and the high lines.)
As far as I can tell, his decision was based on… a heuristic that developing countries are lower status, and lower status=poorer=not a good investment? (I say “decision”, but I don’t know if it even occurred to him as an option...)
Just be careful that markets /= economy. The developing economies might still grow steadily, while their markets can fluctuate a lot. One of the most widely used Indexes for emerging markets is the Morgan Stanley BRIC. You can easily google and find some funds that invest in it and look at their performance to get an idea. The first one that I found (here) has a decent summary of its most important features. You can see that it is actually losing money . A very important number you should look at is the standard deviation, which is written to be 23% over three years. On the contrary, investing e.g. in the US health care sector has given much better results (see here) with less risk.
To summarize: what you say it’s true in the long run, but equity investments have a significant short and medium-term evolution, which is generally independent of the long-term trends.
Hm.
Well, I just did a quick google search for
developing economiesand looked for graphs that seemed to deal with the comparison I’m interested in.For instance:
http://carnegieendowment.org/images/article_images/decoupleR1.gif
http://blogs.worldbank.org/files/prospects/charts/nl33cj23.sn0/chart-small.png
http://static.seekingalpha.com/uploads/2011/9/4/saupload_trendr1.png
http://farm5.static.flickr.com/4094/4771449749_7c63d01bdc.jpg
http://www.imf.org/external/pubs/ft/fandd/2012/09/images/dervis2.jpg
And my dad put the majority of investments in “Canada” and “US”, which… are in the group of economies represented by the lower lines. (And the rest in “world”, which is the average of the low and the high lines.)
As far as I can tell, his decision was based on… a heuristic that developing countries are lower status, and lower status=poorer=not a good investment? (I say “decision”, but I don’t know if it even occurred to him as an option...)
Just be careful that markets /= economy. The developing economies might still grow steadily, while their markets can fluctuate a lot. One of the most widely used Indexes for emerging markets is the Morgan Stanley BRIC. You can easily google and find some funds that invest in it and look at their performance to get an idea. The first one that I found (here) has a decent summary of its most important features. You can see that it is actually losing money . A very important number you should look at is the standard deviation, which is written to be 23% over three years. On the contrary, investing e.g. in the US health care sector has given much better results (see here) with less risk.
To summarize: what you say it’s true in the long run, but equity investments have a significant short and medium-term evolution, which is generally independent of the long-term trends.