Wealth Managers Bet on Emerging Markets Despite Global Conflict

Justin Onuekwusi of St. James's Place highlights that while emerging markets offer attractive valuations, investors must look beyond headline figures to avoid concentration risks, particularly in the tech sector. Aberdeen Investments echoes this sentiment, noting that while performance varies, AI-driven demand continues to bolster growth across emerging Asia. However, the firm warns that dispersion is rising, with performance increasingly tethered to a narrow set of technology exporters.

Strategy shifts are also underway as managers rotate away from stagnant sectors. Michaël Lok of UBP has opted to divest from China due to structural headwinds, while simultaneously downgrading energy holdings in favor of utilities that benefit from AI-linked infrastructure. Meanwhile, on the fixed-income front, managers are increasingly favoring sovereign bonds over corporate credit. As Onuekwusi points out, tighter spreads make credit risk less compelling, prompting a pivot toward government debt as a more reliable diversifier during periods of heightened volatility.