Ben Yearsley, investment manager at Hargreaves Landsdown is one of those. “It is undoubtedly true that the next decade will be emerging markets decade again but there will be periods when developed markets look good value, yet people seem to have forgotten about them to a large degree,” he says.
Yearsley points to all major developed market - North America, Europe, UK and Japan - as areas he feels offer potential value for investors.
Top three IMA North America funds, by 1yr
| Fund | 1m | 3m | 6m | 1yr | 3yr | 5yr | 10yr |
| Legg Mason US Equity TR in GB | 3.76 | 8.63 | 15.01 | 56.78 | -25.18 | -17.66 | -46.14 |
| M&G North American Value TR in GB | 3.59 | 10.21 | 20.03 | 66.25 | -6.65 | ||
| SJP North American TR in GB | 3.86 | 12.81 | 15.85 | 59.29 | 1.15 | 14.22 | -25.55 |
According to data from financial express there are 79 funds in the IMA North America sector.
Nick Ford, who co-manages five SWIP American funds including the SWIP North American fund, agrees developed markets are looking cheaper.
“People always forget that historically, over a long haul, a country like America has minimal government intervention in people trying to run their businesses. It is a far more entrepreneurial society and over time it is countries like America that have built some of the most powerful global franchises that dominate important industries,” he says.
He points out that there is no equivalent of companies such as Microsoft in the developing world.
“You can buy these incredible blue chip companies, such as Coca Cola and Proctor & Gamble for very attractive prices. They are not going to blow up, they are not going to default on their bonds because of the tremendous cash flow that they have. There is no political risk and minimal financial risk; you cannot make that case for some of these emerging market funds.”
Moving over to Europe, data shows there are 107 funds in the IMA Europe excluding UK sector.
Top three IMA Euoprean ex UK funds, by 1yr
| Fund | 1m | 3m | 6m | 1yr | 3yr | 5yr |
| BlackRock European Dynamic TR in GB | 1.08 | 1.72 | 2.74 | 68.51 | 27.58 | 99.20 |
| FF&P Euro All Cap Equity TR in GB | 2.59 | 7.26 | 16.14 | 72.74 | 43.56 | 110.57 |
| Invesco Perp European Opportunities TR in GB | 1.63 | 3.27 | 16.20 | 98.75 |
Trustnet Alpha Manager Chris Rice, who manages the Cazenove European fund, says March was the best month of the quarter for Europe with lively movement in European indices.
“The DAX had its third best month since the rally began in March. This was achieved despite, or maybe because of, a falling euro,” he says.
Looking next to the UK, data suggests there are 87 funds in the IMA UK Equity Income sector.
Top three IMA UK Equity Income funds, by 1yr
| Fund | 1m | 3m | 6m | 1yr | 3yr | 5yr | 10yr |
| Henderson UK Equity Income TR in GB | 4.73 | 6.18 | 9.25 | 62.08 | -23.21 | 12.00 | 21.93 |
| Henderson UK Strategic Income TR in GB | 1.92 | 1.69 | 5.84 | 65.84 | -38.11 | -3.60 | -48.23 |
| Unicorn UK Income TR in GB | 3.45 | 5.43 | 10.25 | 69.69 | -6.13 | 33.35 |
Alpha Manager Nick Purves, who manages the Schroder Income fund, refers to academic work by Dimson, Marsh & Staunton, which looks at historical GDP growth rates and then subsequent stock market returns between developed and developing markets showing an inverse correlation.
“This shows that it is not as simple as saying emerging markets are likely to grow faster than developed markets, therefore go and buy a load of emerging market equities.
“What people often forget is that the market is a discounting mechanism so that gets priced in and therefore there is a big danger of just piling into a high growth economies, where the danger is already in the price, and you actually get a disappointing return, which is what the research shows.”
Lastly to Japan where data shows there are 55 funds in the IMA Japan sector.
Top three IMA Japan funds, by 1yr
| Fund | 1m | 3m | 6m | 1yr | 3yr | 5yr | 10yr |
| Cler Med Japanese Focus TR in GB | 5.25 | 16.58 | 19.92 | 50.73 | |||
| JPM Japan TR in GB | 5.01 | 16.08 | 13.79 | 46.69 | -7.06 | -1.95 | -50.21 |
| Schroder Japan Alpha Plus TR in GB | 5.37 | 16.50 | 19.93 | 51.25 | 4.67 | 18.39 |
Stephen Harker, an Alpha Manager, who co-manages the GLG Japan Core Alpha fund says Japan is offering an attractive risk/return profile at the moment.
“The Japan Core Alpha Fund aims to invest in companies trading on very low valuations but whose business has the ability to recover. This describes Japan perfectly at the moment – valuations are very low, but the economy remains top quality.
“Within the market, this approach has led us at the moment to a portfolio whose main points of focus show a combination of the largest companies with a domestic exposure, as opposed to major exporters, and whose business is either financial or economically defensive,” he says.