Bruce Stout, who runs the £1.6bn Murray International investment trust for 35 years now, spoke during the Association of Investment Companies (AIC) lunch in London this week that UK will struggle to grow its economy significantly in the years ahead due to ageing populations, high debt levels and problems in the banking system. These were his reasons why he currently has his lowest ever exposure to UK and European shares. Thus, comparing to emerging markets which have younger populations and banks in better financial health will grow at a much faster pace.
According to Mr Stout, he thinks that we are heading for a period where Asia will be the envy of the world again in terms of good fortune. The trust invested in Asia has a percentage of 34 percent and in UK it has only 8 percent which is 36 percent lesser compared in Asia.
An example of that happened to China and India where for hundreds of years ago, they were the envy of the world until imperialism came and suddenly changed. Regardless of what happened, currently Asia is changing back now. In Asia, there are numerous good companies while it is more difficult to find in UK or in Europe that explains why Mr. Stout have the lowest exposure in his thirty-five years managing the trust.
In recent years, the performance of the Murray International trust was affected by the impact of the trade dispute between the US and China and has hurt the performance of many Asian equity markets. 17 percent has returned over the past three years comparatively lower than the 30 percent average trust in the same time frame.
Mr. Stout recognized that there would have a negative impact on his emerging market investments if US interest rates arise but for short-term considerations only . He also believes that Asia will outperform the UK over a longer period of time.
Keith Wade who is the chief economist at Schroders assumes that in 2020, the global growth and with an easing of trade tensions between China and the US alongside with the growth rate of emerging market economies will have a general pick-up.
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