1:1 WITH GORDON FRASER

Gordon Fraser
Co-head of the Global Emerging Markets Equities team, Blackrock fundamental active equity.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

How long have you been investing in Emerging Markets (EM)?

I’ve been an EM investor my entire career. 14 years.

Risk: Emerging market investments are usually associated with higher investment risk than developed market investments. Therefore, the value of these investments may be unpredictable and subject to greater variation.

What makes a country “emerging”?

Many people think “emerging” implies something about a country’s wealth or its technology prowess. This is not the case. What really defines an emerging market is how developed the stock market is. Index providers look at the things that make a market function ― how liquid the market is, how well-established the settlement and custodial systems are ― and then bucket them accordingly. It’s not at all about how rich or poor the people are.

What excites you about EM investing?

It’s never boring. There are 25 countries in the EM index. They all have their own currency, unlike in Europe where many countries have the euro. All of these countries have their own economic cycle. There is also much more diversification across stocks in terms of their individual prospects and performance.  All of this is great for an active investor.

Risk: Diversification and asset allocation may not fully protect you from market risk.

What do people get wrong about EMs?

Many people go in thinking they’ll capitalise on the old narrative that has the poorer country catching up with the rest of the world. That was EM investing 1.0. Today some EMs are leap-frogging developed markets (DMs) in areas of technology or entertainment, for example. Investors should be thinking about buying with the potential to beat the benchmark. When we look at emerging markets, we don’t see a great fairy tale growth story. We just see potential for outperformance, and that’s what really excites us.

How many EM countries have you visited?

I’ve visited roughly 35 emerging countries to date. I’m prouder to say that my three children, ages 10, 7 and 4, have visited 10.

Risk: This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or financial product or to adopt any investment strategy. The opinions expressed are as of November 2020 and may change as subsequent conditions vary