There was a time when global meant looking to Europe or Japan, or perhaps Australia if you were bold. That's no longer the case. The changes that are driving many of the emerging nations are profound and offer significant new investment opportunities for mass affluent Americans (consumers with total investable assets of $250,000 or more) looking to allocate a portion of assets outside the U.S., specifically in emerging markets.
The acronyms we hear often tell the story of opportunity: BRIC, CIVETS, MAVINS, representing countries that are changing in dramatic ways such as Russia, Vietnam, and Mexico. They represent areas of the world that are changing patterns of wealth, driving the growth of an enormous middle class and trending to be more comfortable with globalization than their developed counterparts. They are also some of the most interesting areas for long-term growth, keeping in mind there are risks inherent in these markets, including currency fluctuations, changes in political and economic conditions which will result in market fluctuations, as we're seeing now.
As developed nations grapple with a still hesitant recovery, some of the greatest changes are happening across Latin America, Southeast Asia and Africa. These and other emerging markets are expected to expand significantly faster than most developed ones over the next few years -- with some estimates citing three times the growth. While still small, these are some of the key drivers of a new global economy, warranting investors to keep a watchful eye.
Never before has the impetus been greater for U.S. investors to understand the role emerging countries play in the global economy and their own portfolios. We have long been convinced that we live in a world where substantial macro opportunities exist for these burgeoning nations, and also for those investors looking for a stake in their growth. So what does this mean for investors? Global investing is important, not only for long-term growth but also for portfolio diversification. Since reaching significant new levels in the past few years, emerging market stocks are continuing to present solid development potential.
HSBC Bank USA recently conducted a survey on behalf of its Premier banking and wealth management service, offered through HSBC Securities (USA) Inc. ("HSI"), which found that while 82 percent of America's mass affluent investors believe emerging markets present a great opportunity, some 67 percent say they require more knowledge before allocating their investments there. The survey also highlighted an industry opportunity. Some 80 percent of respondents believe having an experienced global advisor is necessary to successfully invest globally, yet more than one-third (38 percent) are currently relying on themselves to make investment decisions.
Countries, such as some of the CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa), with upside consumer purchasing power, raw material deposits and robust manufacturing, look poised to be the new group of success stories.
Investing in emerging markets will not be for everyone. Investors need to be comfortable with the risks and volatility of such investments, finding the right balance in their portfolio to meet their tolerance for risk and overall investment objectives.
Education and understanding are essential. We in the financial services community must recognize our role in helping investors make the most of opportunities in the high-growth economies. This is the decade in which new emerging economies will come of age. Brazil, Russia, India and China have established a new course for optimizing global opportunities investors should consider. Of course, there will be times of caution. We're experiencing one of those right now. But, working closely with an experienced financial advisor with in-market knowledge and real-time information makes the climb to emerging market success much easier despite currency fluctuations and political climate changes.