Famed UK fund manager Anthony Bolton thinks they very well might (HT: RealClearMarkets.com):
My contention is that a combination of consumers rebuilding their balance sheets, slower credit creation in this upturn than was historically the case, and governments being forced to cut spending or increase taxes will lead to lower growth than before the crisis.
The big question now is whether the relative growth advantage of emerging markets over the developed world has increased.
I think it has – particularly for emerging markets that are driven by domestic demand and investment. I am less keen on those markets where exports or commodities are the main drivers. One reason these are less attractive today is the fact that commodity shares and industrial companies were the leaders of the last bull market.
Further down:
If that is the case, then UK investors’ typical exposure to emerging markets, of about 15-20 per cent of an equity portfolio, could prove too low. Perhaps, for the next few years, they should consider having a majority of their exposure to markets that can provide higher growth.
But if all investors in developed markets make similar changes to their asset allocation, I believe we will have all the ingredients necessary for a new bubble to develop over the next few years in these volatile but rewarding markets.
Fasten your seat belts – we are in for a bumpy, but enjoyable, ride.
If you find Bolton's comments interesting, read the entire thing. This has been posted on RealClearMarkets, so I imagine it can be accessed without subscribing to FT.com.
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