OppenheimerFunds CIO Krishna Memani believes that the United States, whose economy has been growing at a good, sustainable rate of 2%, would require significant fiscal stimulus under the current Trump administration to boost its growth rate to the next level, 2.5%-3% for example.
In Memani’s view, such stimulus is unlikely to happen, but investors may look to Europe and emerging markets for exposure to the investment benefits of higher economic growth rates. He believes both regions have surprised on the upside and may offer more attractive return opportunities than the U.S. currently.
The Case for Active Management in Emerging Markets
In particular, Memani says that active management could potentially benefit emerging market investors. He acknowledges that there are appropriate instances for investors to utilize passive strategies, potentially in an asset class like large-cap U.S. equity, where dispersion is relatively modest. Yet he firmly believes investors “can add value on top of that.” He points out that because emerging market indices are weighted by market capitalization, they tend to be tilted toward companies that may have lower growth potential, such as major banks or steel manufacturers. In his view, meaningful returns could be found by actively picking the stocks of companies that are poised to monetize the economic expansion of emerging economies and ride their future wave of development.
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These views represent the opinions of OppenheimerFunds, Inc. and are not intended as investment advice or to predict or depict the performance of any investment. These views are as of the publication date, and are subject to change based on subsequent developments.