Whilst the world grapples with technological disruption, it seems many investors choose not to “disrupt” conventional investment
practices despite several short comings. This is because investment thinking, which is fundamentally sound but unconventional, tends
to be considered with greater discomfort, despite potentially being very rewarding. It is only when results have already been rewarding,
that herd mentality follows. To take advantage of this, an investor needs to be open-minded and willing to tread off the beaten track to
improve their portfolio’s risk-adjusted returns.
One major issue facing investor portfolio’s today is the capital growth conundrum given low prospective returns. Whilst emerging
markets have commonly been considered a solution to this conundrum, there has been a stark mismatch between expectations and
reality. The theoretical prospect of high growth and uncorrelated returns has unfortunately not eventuated and is unlikely to do so going
forward in its traditional construct.
This paper looks to identify why the current emerging market approach has failed investors and identifies possible solutions to provide
the desired growth and diversification one would expect from investing in emerging markets strategies.
7 November 2018; Ray Dalio, Founder, Co-Chief Investment Officer & Co-Chairman, Bridgewater Associates on the Forum Stage during day two of Web Summit 2018 at the Altice Arena in Lisbon, Portugal. Photo by Harry Murphy/Web Summit via Sportsfile