How To Buy Emerging Markets Without Getting Your Hands Dirty
If you’ve ever watched a certain television programme in which the participants have to choose between buying a holiday home in the UK and buying one abroad, you will have seen the same pattern of emotions play out repeatedly.
Fear, desire and excitement for the foreign option compete with the knowledge that it could be hard to buy and sell, hard to find decent tradesmen, hard to integrate into the local community and learn the language, and hard to get to from the UK.
On the other hand, the UK option usually suffers from bad weather, high property prices and perhaps a feeling that it’s not very daring — but it is sensible, understandable and low risk.
Investing directly in the stock markets of emerging economies is exactly the same. On the one hand you have the feeling (often mistakenly) that you are ahead of the curve, a pioneering investor who could make millions from a few canny choices.
On the other hand, you have to live with the knowledge that uncertain property rights, opaque corporate governance, an unstable tax regime, infrastructure problems and corruption might all derail the value of your investment — even if you manage to choose successful companies.
That’s why my preferred way of investing in emerging markets does not involve buying foreign shares — but I still get to reap the rewards of the massive global expansion of the middle classes, by which I mean people with disposable income and the leisure to dispose of it.
To put my money where my mouth is, I’ve selected five UK shares that I think offer attractive yet safe exposure to emerging market growth — but you’ll have to read my latest article for the Motley Fool to find out what they are.
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