Emerging Markets in an Upside Down World: Challenging Perceptions in Asset Allocation and Investment

Foreword by Nigel Lawson

Jerome Booth was a key member of the 1999 buyout team that turned the Ashmore group into a highly successful investment manager specialising in emerging markets. Having made his fortune, he has now left Ashmore to devote his time to building up a portfolio of business start-ups, philanthropy (particularly in the area of music, his great love) and writing this admirable book.

The heart of the book is the case he makes for investing much more heavily than is customary at the present time in emerging markets, and is directed in particular – although not exclusively – to the institutional investor. It is, of course, widely recognised nowadays that for the foreseeable future the growth prospects of much of the developing world are very much greater than those of the developed world. At the very least, they still have a great deal of catching up to do; and the combination of globalisation and the change from top-down planned economies to largely market economies is enabling them to do so.

Yet despite this, Booth observes, a typical Western pension fund might have around 5% of its portfolio invested in emerging markets and 95% in developed world markets. In his judgement, the emerging market proportion should be more like 50% than 5%. So why have Western institutional investors, as he sees it, got it so wrong?

There are a number of reasons, but the most important is the assumption that the emerging world is a much riskier place to invest in. Booth’s thesis is ...