Jeremy Grantham, the 79-year-old investor known for his bearish views, is so bullish on emerging-market stocks that he’s telling his own kids to invest more than half their retirement money in the asset class.
“What I would own is as much emerging-market equity as your career or business risk can tolerate,” Grantham, co-founder of GMO, the Boston-based asset-management company, told investors in a letter last month. It’s the only investment arena with a realistic shot at delivering 4.5 percent real returns annually over a decade, he said.
Grantham, who correctly predicted in 2000 that U.S. stocks would lose ground for the next decade, joins a growing chorus of fund managers who have become bullish on the emerging world. Peter Oppenheimer, the Goldman Sachs chief global equity strategist who forecast last month’s selloff, says stocks should rally this year, led by developing nations. Barbara Reinhard, the head of allocation for $224 billion in assets at Voya Investment Management, expects outperformance for years to come.
They were the place to be in the 2000’s. Not so much in the 2010’s. The main issues are transparency and business acumen. The best way to play emerging market growth may be to buy western multinationals with large exposures to emerging markets. More business sense, more accounting transparency. That said, I have direct exposure but it sure isn’t half my portfolio.