Give serious consideration to having emerging market stocks in your portfolio.
Consider that emerging markets, at market-exchange rates, are expected to have 35% of world gross domestic product by 2013, according to the International Monetary Fund. To reach 35% of world GDP reflects remarkable growth. In fact, the emerging markets share of global economic output has risen a whopping 50% over the past decade and is now 30% of global economic output.
The emerging market share of global output is even larger if it is looked at in terms of purchasing power parity, which means looking at it in terms of how much it costs to purchase an item in different countries. If measured by purchasing power parity then emerging markets currently account for 45% of global GDP.
How can you use this information? You should have emerging market equities in your investment portfolio. Also, to take advantage of emerging market growth, you should have in your portfolio domestic companies that are market leaders and which export to emerging markets.
Related Activities and Side Trips
- Asset Allocation – Think Broadly and Look at the Big Picture
- Asset Allocation and Diversification – Asset Classes
- Emerging Market Debt
- Emerging Market Equities – BRICs and Other Considerations
- Global Investing – Adding Foreign Stocks as U.S. Ends its Worst Decade Ever
- International Investing
- The World has Changed – Slow Growth is the New Norm
- U.S. Credit Usage and Global Growth
