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Do you stand by your position that the bloom is off the BRICs, and we’ve got to look elsewhere for good returns?
Absolutely. If you look at the big outperformers in 2012, Turkey was up 60 percent, the Philippines up 45 percent. And you’ve got a whole bunch of countries like Nigeria also up significantly. We are seeing a leadership shift in emerging markets.
How can U.S. investors put money in Nigeria and sleep at night?
With all these places, there’s a lot of risk on the table. You really have to have a lot of guts to go into Nigeria. But our frontier fund people really think that’s the place to be.
In these countries, how closely correlated are the economic dynamics and the market dynamics?
They are quite correlated except in China. You’ve got this massive boom in China with little to show for it in the domestic stock markets.
How do you determine which emerging markets are the new stars?
The lesson from economic history is that there is always churn. The leaders of one decade are rarely the leaders of the subsequent decade. The biggest mistake we make in the world of investments is to extrapolate—to think that because something has done well for a decade the same thing is going to happen the subsequent decade.