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A Regional Approach

The majority of advisors report greater portfolio diversification is the primary reason for emerging markets exposures.

As advisors become more familiar with the emerging markets as a whole, they have become more inclined to view the region less as a monolithic entity and more as a collection of distinct regions. Nearly seven in 10 respondents (68%) report that they currently evaluate the different regions within emerging markets as discrete areas in which to invest, rather than simply looking for funds that cover these markets collectively.

Within the emerging markets category, advisors have focused specifically on Asian markets. The vast majority (93%) report that they allocate at least some of their emerging market equity investments in Asia. In fact, advisors allocate roughly a quarter (26.4%) of their emerging markets exposure to Asia.

Specific investing patterns have begun to emerge within Asia, as well. Respondents with at least some emerging market equity investments in Asia report that they allocate an average of nearly 16% of their emerging markets equity holdings to China alone. As advisors gain experience with emerging markets equities, their ability to discern trends within specific regions—and take advantage of those trends—is likely to grow.