Emerging Markets Too Risky; Mull Europe Instead
One of the best-known international stock fund managers is moving money out of emerging markets and into undervalued large-cap stocks in Europe.
David Herro, chief investment officer at Harris Associates, likens the current euphoria in emerging-market stocks to the bubble in the so-called Asian Tiger markets 10 years ago.
Speaking in Chicago an a conference sponsored by the stock and fund research company Morningstar (MORN), Herro noted that when the Asian markets hit their peaks in 1997, portfolio and fund managers were recommending that investors hold 15% of their portfolios in Asia.
But after more than 70% of the value of the Asian markets was wiped out, those same managers said investors should reduce their holdings to 0%, says Herro."We are now getting to a stage where there is a lot of euphoria," says Herro, the portfolio manager for the Oakmark (OAKIX) International Fund (OAKIX). "Everyone is saying hold 10% or 15% of their portfolios
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