Investors are chasing risk since the markets bottomed in March. While the U. S. large cap stocks as measured by the Russell 1000 index are up 10.9%, small cap stocks have rebounded 12.6%. Developed foreign markets have scored even better, galloping 18.0%.
While the above returns are impressive, the real action has been in emerging markets. After being drubbed in the latter part of 2008, emerging markets are re-asserting their leadership. The MSCI Emerging Market index has surged 24.2% with Latin American stocks leading their Asian peers.
True, many emerging economies are in better shape than developed economies like those in North America and Europe. For one, emerging economies continue to grow. China’s economy swelled 6.1% in the first quarter, in stark contrast to the 6.1% shrinkage in U. S. gross domestic product. Likewise, many emerging economies enjoy substantial foreign exchange and budget surpluses.
Yet, investing in emerging markets is not without risk. Recent news from Thailand and Mexico highlights the political and country-specific risks such investments can pose. Stock prices in emerging markets are usually more volatile than in developed markets.
So, will the current rally continue? Will investors continue to chase risk?
Prudent investors do not bet on ‘yes or no’ answers. To reap rewards and manage risk, they prefer to invest in a diversified portfolio of well-managed domestic, foreign, and emerging market mutual funds like those recommended in the AlphaProfit Fund Investors’ Guide.
Subscribe to the AlphaProfit Sector Investors’ Newsletter and access the domestic, foreign, and specialty fund recommendations included in the AlphaProfit Fund Investors’ Guide.
About AlphaProfit
AlphaProfit Investments, LLC, is a Texas-based investment research firm. AlphaProfit publishes the AlphaProfit Sector Investors’ Newsletter. As evident from its Hulbert rankings, the newsletter is a consistent, top performer that has bagged the coveted #1 RANK several times. Drawing on insights and research into sector investing, the newsletter offers winning sector fund and exchange traded fund recommendations and top mutual fund portfolios for superior long-term results.
To learn more about AlphaProfit and to subscribe to the AlphaProfit Sector Investors’ Newsletter, visit http://www.alphaprofit.com.