Consider emerging market ETFs to capitalize on demographic shifts

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Despite the economic potential and investment rationale that emerging markets present, most Canadian investors continue to overlook them in favour of stocks much closer to home

Much has been made of China’s demographic turn toward a Japanese-style aging of its work force. Despite these concerns, portfolio managers still point to the economic giant as the standard bearer for emerging market countries. And with a growing middle class, that shouldn’t change any time soon.

Mr. Kuntzevitsky’s long view is likewise bullish, driven by three tenets that have fuelled emerging markets for years and, he suggests, will continue to. Exchange-traded funds can be a way to capture these opportunities. Yet despite the economic potential and investment rationale that emerging markets present, most Canadian investors continue to overlook them in favour of stocks much closer to home.

Ms. Kelly says emerging market investment isn’t just a play on commodities any more. The AGF Systematic Emerging Markets Equity ETF has about 24 per cent in information technology and nearly 19 per cent in financials. “We don’t invest in individual stocks or individual names. The path we take is ETFs to express our macro view,” he says. “They offer versatility and a breadth of exposure that we otherwise couldn’t have.”

 

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