Wealth managers and financial advisers are expecting their clients to increase allocations to emerging and frontier markets over the next 18 months, according to research from Pureprofile.

The study, commissioned by Vietnam Enterprise Investments Limited (VEIL), found that 64 per cent of wealth managers and financial advisers forecast clients to increase their allocations to emerging and frontier markets by between 10 and 15 per cent over the next year and a half.

Furthermore, two-thirds (66 per cent) of those surveyed believed clients were currently underweight in emerging markets.

However, 93 per cent of wealth managers and financial advisers expected their clients to be overweight in emerging markets by the end of 2025.

Over the next five years, 92 per cent of wealth managers and advisers expected growth in emerging and frontier markets to outpace growth in developed markets.

Survey respondents saw the growing middle class in these countries as the biggest attraction for investors, followed by the view that many emerging and frontier markets were undervalued, and the belief they are set to benefit greatly from the technological revolution.

Other reasons for finding emerging and frontier markets attractive include growing stability in some of these markets, and the fact that some are attracting large quantities of foreign direct investment.

Nearly all (99 per cent) wealth managers and advisers believed that frontier equity markets were an ideal environment for active fund managers to outperform because company disclosures in these markets are more limited, and analyst coverage is much lower than is typical in either developed or emerging markets.

“Many emerging and frontier markets are dynamic and enjoying rapid positive change and growth,” commented VEIL lead portfolio manager, Tuan Anh Le.

“This represents an exciting opportunity for active investors, and our research shows that many wealth managers and IFAs expect clients to increase their exposure to these markets.”

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