I am currently planning to specifically expand my portfolio to include emerging markets - not out of short-term actionism, but with a clear long-term plan.
A large part of global growth is taking place outside the developed markets. Over 80% of the world's population lives in emerging markets, where new middle classes, rising consumption and long-term growth drivers are emerging. If you want to invest globally, you should not ignore this part of the world.
I am already indirectly invested in emerging markets via my FTSE All-World (VWRL) with around 10-11%. This share is automatically generated by market capitalization, but is too low for me in the long term.
I do not see the weak performance of recent years as a warning signal, but as an opportunity. Valuations are moderate, expectations are low - a good environment for long-term investors.
I will build up my EM share in stages, both through one-off investments and a monthly savings plan, with the aim of achieving around 20% emerging markets in my portfolio in the long term.
To achieve this, I am relying on a broad, distributing MSCI Emerging Markets ETF: cost-effective, physically replicated and without country or theme bets. $XEMD (+0.45%)
Emerging markets are volatile - but in the long term they are an indispensable building block of genuine global diversification.
