MFOHome About Commentary Discussions Funds The Best Resources Support Us!

Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

Sign In Register

Categories

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

How to Invest in a Slowing China World -- GaveKal Capital

davfordavfor
edited November 2015 in Fund Discussions
"...let’s look at China from the 30,000 foot view. From this perspective we observe two things that will unfold over the next decade. First, investment as a share of GDP will fall from almost 50% of GDP to closer to 35% of GDP, if not lower. Second, consumption as a share of GDP will rise from 38% to around to 50%, if not higher...Companies that feed off of Chinese investment in infrastructure will likely struggle and companies that benefit from Chinese consumption will do ok, if not great."

image

"...all the common benchmarks for diversified developed or emerging markets (MSCI, FTSE, Vanguard, etc) are around 50% (or more) allocated to the economic sectors with the largest headwinds in the decade ahead. That means that any diversified EM or DM investment products (mutual funds or ETFs) that look anything like the benchmark are by default leaning into the wind rather than letting it push them. "

See: GaveKal

Comments

  • VintageFreakVintageFreak
    Now let's hope they can translate this "insight" into profits for their shareholders. Such as me.
  • AndyJ
    edited November 2015
    Echos of Andrew Foster's outlook going back three years - and he's crushed the index with SFGIX. Still, even following the Foster/GaveKal formula, EMs haven't done much, in absolute terms.
  • TSP_TransferTSP_Transfer
    A Big Bet on Emerging Markets
    Posted on November 17, 2015 by David Ott Acropolis Daily Insights
    Schwab’s IMPACT conference
    This year featured more academics than usual, which I found particularly engaging. One of the sessions was actually a debate between academic Roger Ibbotson (who also manages some money) and Rob Arnott, a practitioner with some academic credentials as the former editor of the Journal of Portfolio Management and the author of a number of papers.

    The debate was good, although the real highlight for me was during the audience Q&A when someone asked Rob Arnott how much of his personal net worth was invested in emerging markets stocks.
    First, Arnott has been saying that emerging markets are a great value for a while now and they keep heading lower. With the double digit decline this year, he said at the conference that he is now pounding the table that emerging markets are a screaming buy if you’ve got a 10-year time horizon (which, in theory, we all should).
    Second, the question is good because it asks the question the right way. In the last issue of Portfolio Insights, I included a quote that Chris found from finance author Nissim Taleb who said, ‘Never ask anyone for their opinion, forecast or recommendation. Just ask them what they have or don’t have in their portfolio.’

    Arnott responded by saying that he now has one-third of his net worth in emerging markets stocks, which is a big time wager. Emerging markets stocks account for about 15 percent of the world’s market capitalization, so Arnott has a huge relative bet on them. I would never make that kind of bet, but I admire that he’s put his money where his mouth is.
    image
    http://acrinv.com/a-big-bet-on-emerging-markets/
Sign In or Register to comment.