Emerging markets; Overheated or room to run?

With some emerging markets funds posting better than 100% gains year-to-date, it’s easy to think that this typically volatile market segment has gone too far too fast and is due for a significant correction.

While a pullback wouldn’t be surprising, Milton Ezrati, Senior Economist and Market Strategist for Lord Abbett, suggests that return expectations for these developing nations are still attractive.

Here is how he concluded his November 9 market commentary:

Whether on the basis of economic vitality, concern over inflation, or policy fundamentals, these emerging economies would seem to offer better and more secure investment bets than the developed economies, and even, ironically, a safe haven, when not too long ago they were considered too risky for any but the most adventuresome. It is little wonder that the G-20, which includes these emerging economies, now gets more attention than the G-8, which remains an exclusive club of the established, developed economies.”

As we in the U.S. try to understand the ultimate impact that the recession and subsequent financial intervention will have, it’s good to know that not every economic region is pushing the same boulder up a mountain.