More and more investors these days discover that there are rewards outweighing risks when looking at the emerging markets. China is one of the best examples of that. In the past 5 years we saw investors getting returns of close to 50% when Dow Jones just made around 1.2%. Such a difference between the developed and emerging markets is seen at a global level. Generally, the highest possible returning securities and growth are often found in the emerging economies.
Moderate Volatility And Growth
Marc Leder was once quoted as saying that only moderate risks are taken as investors add the emerging markets to the portfolio. Huge profits can be reaped by focusing all the investments in the emerging markets but this is definitely not something that is recommended by most professionals. A simple government or policy change can lead to problems.
Besides the highly popular China, there are numerous other emerging markets that are far less risky and that actually guarantee the protection of the investments made. Financial service companies and professionals are always present to help the investors select something that is suitable, based on personal needs. Also, there is a growing number of companies that go global so stocks offer favorable exposure to the up-and-coming markets. Investing in associated ETFs and stocks can actually increase returns while risk is just moderate.
Private Equity Investments
Private equity is highly preferred by many companies to privately raise funds. For many businesses the option is much better than public equity present in the exchange markets. The system does work really well for the companies that are not listed, especially when perceived risk is high.
The private equity investors basically acquire company stakes and then share returns, together with risks. Some years ago, before the global financial crisis, we saw many different cheap financing options. That time is over and now we see private equity as being highly profitable, bringing in really good results. In an attempt to make as much money as possible, the private equity investors seek investment opportunities in numerous emerging markets like BRIC, Africa and Asia.
Obviously, the private equity investors will face different challenges when investing in the emerging markets. It is possible to be faced with unfavorable taxation and different regulatory impediments. Even so, investors are interested because earning potential is high. Due diligence is always needed before investing but we are faced with really high investment mobility. Emerging markets realize that private investors can do wonders for the economy so great regulations are often seen. Also, there are ways in which taxation can be avoided, like through the preferred jurisdiction laws in Mauritius.
Emerging markets are risky but we are looking at some investment benefits that clearly outweigh risks. This is why investors are now looking at the emerging markets as great ways to increase the investment budgets available. Opportunities are now available for the investors that want to cash in on rapid growth. Why not take advantage of the possibility to get fast growth and high returns?