Asset management is all about trust as emerging market (EM) specialists at LGM, part of BMO Global Asset Management, explain in this video. They go on to describe the fundamentals for the EM investment case, and why they are so strong. As lead portfolio manager, Rishikesh Patel said: “Some 75% of the world’s population are based in emerging markets, half the world’s GDP is generated there, yet just 15% of the market’s capital comes from the region.”
Active managers recognise that focusing on urbanisation and productivity gains will maximise returns since these trends result in a young and dynamic workforce, new factories, automation and higher wages. It’s not just the relationship with investors that is important to the LGM team, but the partnerships with businesses in the region.
These relationships are established over five or ten years with companies characterised by talented management, a strong brand, a competitive position, and a robust balance sheet.
Potential in the region can be illustrated by the Indonesian banking system. It is one of the most profitable in the world, yet only one quarter of the population currently have access to a bank branch. The potential for growth in this case is clear.