Weekly Market RecapThis week saw US GDP estimates revised up for Q1, and some very strong US housing data. US housing has been mixed in recent years, but may now be starting to gain momentum. Internationally, Greece continues to dominate headlines, but remember that Greece accounts for less than 0.5% of the global economy. This week, we want to discuss the value of emerging markets for your investment returns. At FutureAdvisor, we currently see good prospects for emerging market stocks within a diversified portfolio. The term emerging markets refers to foreign countries that are typically less mature in their institutions and processes but may experience faster growth than the global economy. Examples of emerging markets include China, India and Brazil. One reason we view emerging markets as attractive is because their stock markets generally trade at a discount to the global markets. For example, emerging markets currently have a dividend yield of 3.0% relative to 1.9% for the US market. This considerable price discount means that emerging markets have the potential to deliver a healthy return. Our research suggests that markets with higher dividends see higher than average returns. Secondly, emerging markets can offer the prospect of higher growth, due to both economic and demographic trends. For example, China has grown at or above 7% for recent years, which is double or triple the growth in many advanced economies. Of course, buying individual stocks in emerging market can be complex, but Exchange Traded Funds (ETFs) offer an attractive way to gain diversified emerging market exposure at low cost with minimal complexity, in our view. So, we believe emerging markets can help your portfolio grow for the long term, especially when they are part of our diversified portfolio model to help level your returns over time. For example, this year so far China is the best performing stock market of the major economies up 12% in dollar terms, and last year India grew approximately 30% making another emerging market the top performer of major countries. Of course, this growth can come with volatility, and this year Brazil has been weak, just as Russia was in 2014, but overall so far this year emerging market funds are generally growing ahead of their broad US market equivalents. This growth can come with larger short term ups and downs over time, but that can provide opportunities for the tax loss harvesting we offer Premium customers, and for a long-term investor with a diversified portfolio, we believe emerging markets are an important portfolio component to help growth, which is why they form a significant portion of our recommended equity allocation. Reminder: Disclaimer: Your Portfolio Summary
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