Invest in Emerging Markets to Get the Best ISA Returns

  • Added:
    Dec 21, 2013
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While many developed nations are finally showing signs of recovery after the 2008 crisis, many developing countries have rebounded at an astonishingly faster rate. In fact, in many emerging markets the financial crisis was barely even noticed. Thus, many UK investors are looking at these developing countries as a way to get better returns on their investment ISAs. Emerging economies always come with an element of risk, but consumers looking for long-term gains will find that the best ISAs perform well when focused on a number of emerging markets. This article will look at what emerging markets are currently attracting the most attention.

What are the emerging markets?

An emerging market is a loose term that can be applied to hundreds of countries, from powerhouses like China and Russia to the smaller economies of Africa and Central America. The four biggest emerging markets, Brazil, Russia, India, and China, are often referred to as the BRIC nations and these countries often attract the greatest attention by investors. Other players, however, such as Indonesia or Turkey, should not be overlooked given their impressive economic growth in the past few years.

BRIC

While the four BRIC countries dominate discussion of emerging markets, it is important to keep in mind that each BRIC country comes with its own unique set of circumstances. Brazil, for example, has greatly benefited from rising commodity prices, but it is still struggling to address income inequality concerns. Russia, meanwhile, is largely driven by the oil sector and investors in this country would essentially be banking on the price of oil rising over the long term. India, meanwhile, has proven to be particularly volatile, but it also holds a great deal of potential. The Indian middle class is one of the largest on the planet and is well-educated. The Indian economy is also more diversified than many other emerging markets, although the political situation is notoriously fluid and could always cause unforeseen blips in the market. Finally, China, the world's most populous nation, has risen dramatically over the past decades to become one of the largest economies on Earth. China's success has largely been due to exports and infrastructure, meaning that many investors are cautious about banking too heavily on the Chinese economy continuing with its stratospheric rise in the future. However, the Chinese government is now focusing on domestic consumption and helping develop the more impoverished western regions, meaning there is still plenty of room for growth in the long term.

Elsewhere

Many regions outside of the BRIC countries are also enticing investment opportunities for those with the best ISA funds. South-east Asia continues to grow, with countries like Vietnam, Singapore, Malaysia, and Indonesia proving good investments. The less developed countries of Central and South America are also showing great progress and have plenty of room to grow. Africa, which has long been overlooked by the financial world, is now coming on strong with one of the fastest growing regional economies in the world. Of course, while Africa has great potential, especially in terms of infrastructure investment and commodities, it is still a bit of a Wild West in economic terms and is really only for those who are willing to bet on long-term gains rather than short-term results. Finally, the Middle East is another volatile region, but one that is highly dependent on one industry: oil. Nevertheless, as the economies of the UAE, Saudi Arabia, and Qatar have shown, that focus can result in huge returns for investors over time.

Investing money in the best ISA funds that focus on emerging markets will mean balancing the money a customer expects to make back on his funds with the potential risk involved with any emerging market. While some consumers may be tempted to put all of their money into one promising market, the best approach is to spread that investment over a larger region or even over the entire globe. By spreading money this way, investors are more likely to see their money grow substantially over the long term while still protecting themselves from any risks that may come up in the immediate future.

Author's Profile

Lee Master-son the author of this article recommends to his readers looking for further information on the best isa available to visit the uSwitch.com website which offers great comparisons.


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