Friday, 28 July 2017



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Investment Ideas

The potential of the emerging markets

The world we live in today demands each and every investor to think internationally as technology has turned the once enigmatic world into more of a holistic community. An investor would be a ‘fool’ to not undertake an international stance to investment because the global markets can reap great advantages.

The deVere Group’s strategic alliances with leading financial institutions such as Goldman Sachs have enabled the firm to be at the forefront of what is happening in the international markets. Presently, the firm has recognised a new investment theme Goldman Sachs’ chairman of asset management Jim O’Neill has outlined — a new financial venture that could lead investors to have ‘astronomical returns’.

 

Accessing the Economies of the Future – the Next 11 (N-11)

We are about to embark on the most dominant investment theme of the next decade. 11 dynamic economies around the globe have been identified after years of research to provide you with the most exciting investment opportunity in a long time. This is no longer just a theory or a concept, but it is now an investment reality and equity strategy that every portfolio should have a portion of exposure to.

 

Why the Next 11?

Ten years ago the BRIC (Brazil, Russia, India and China) markets were developed by a gentleman called Jim O’Neill (he is now the Chairman of Goldman Sachs Asset Management). These were pioneering markets at the time and anyone that invested at the beginning are now sat on astronomical returns. Of course, these areas will continue to grow and develop but they have slowed down in recent years as they have become affected by the problems within the EU and other developed countries.

Jim O’Neill has been working on a new concept for a number of years to identify ‘’the new BRIC’’. He began with analysing over 200 countries using a thorough bottom up approach, and after years of pioneering research he has found 11 countries that fit the growth profile he was looking for. These markets are the growth profile of the future and it’s a second opportunity for investors to get BRIC like returns again. Analysts from Goldman Sachs believe that in the next ten years the N-11 will contribute more to global growth than the US. Can you imagine these economies rivalling the G7 in the future? Well, it’s closer than you think.

Geographically Diversified – all the countries are non-correlated in terms of their geographical presence, so they have no inflicting economic, monetary or fiscal issues. For example, if Mexico is going through turbulent times, then Vietnam should not be affected. Think of the European Union, where every country is in correlation and the on-going debt crisis is clear evidence how this can affect the portfolios in a negative way. With the N11 however, each country is independent and it offers outstanding balance and diversification.

Growing Populations – each country has a large population and a young work force. India has seen such rapid growth in the last 5 years because it has a young, hungry work force and it’s the same for these economies. Indonesia for example has a population of 230 million — this makes up almost three quarters of the US. These economies have multi decade secular trends of rising consumer class and strong equity class performance.

Low Debt & Integration With Global Economy – low debt to GDP levels in the Next 11 countries may aid in outperforming developed markets with high debt to GDP over the next decade. Strong macro fundamentals and economic management will continue to push strong equity markets in these rapidly growing countries.

Rising Consumer Class – household incomes are increasing which means demand for products is on the rise. Middle and high classes will be a key driving force behind the rise in consumer consumption as homeland entrepreneurs take advantage of growth in their country, thus boosting individual demand for goods, services and infrastructure.

 

Key Facts

  • 19% of the world population is made up from these 11 countries. They are young and hungry for success!
  • The N11 will eventually rival the G7 in terms of new growth.
  • There is a rise in consumer class and domestically driven economies.
  • Driving positive GDP growth and reinvestment.
  • Increased productivity and increased property ownership rights.
  • In the next 20 years, 2 billion people will enter the middle class in the growth countries.
  • The BRICs are heavy in commodity exports. The Next Eleven only have half of the exposure (to commodities) but they have twice the exposure to consumer opportunities.

 

Returns

The N11 is now becoming its own asset class within equity portfolio and this year it has been one of the best performing with return of 12% YTD:

 

Exposure

If you would like to find out more about this new investment venture, then please click here to be guided by one of deVere’s Financial Advisers.