Emerging markets re-emerging as good bets

The emerging markets continue to drive global growth, and to take advantage, advisers need to be opportunistic, said Jason White, portfolio specialist at T. Rowe Price Associates Inc. “The simple answer is to overweight emerging markets, but that’s not the best policy,” he said.

Instead, advisers should focus on local emerging markets stocks that rely on the consumer, Mr. White said.

The savings rate in emerging markets is near 30%, and wage growth is around 15%. “Emerging-markets consumers are in great shape right now,” he said.

Advisers also shouldn’t forget about large multinational companies such as Nestlé SA, which derive a good portion of their revenue from the emerging-markets consumers. “It’s an indirect and cheaper way to access the consumers,” he said.

Emerging-markets stocks fell almost 20% in 2011 thanks to concerns over a slowdown in growth. Mr. White expects growth to accelerate in the second half of the year. “The local governments have a lot of tools to spur growth,” he said.

Emerging-markets debt is another area advisers should be focusing on, said Chris Dillon, fixed-income portfolio specialist at T. Rowe Price.

Advisers can expect around 6.5% yield from a local emerging-markets-debt fund, he said. “It gets a boost from a falling dollar, too,” he said.