Nutmeg's chief investment officer, Shaun Port, explains why his investment strategy for Nutmeg's customer portfolios' remains cautious on emerging markets and oriented towards developed market stocks. "The decision in the US to reduce its bond-buying program, coupled with slow Chinese growth, has caused a lot of uncertainty in emerging markets in recent months. With the valuations of emerging market stocks falling, some investors actually see it as a good time to invest in them, but our view remains that the inherent risks far outweigh any small pockets of good value that may exist. We decided to sell our emerging markets investments in June last year and our customers’ portfolios are more oriented towards developed market equities. In 10 charts, here’s why we think it’s prudent to remain wary of emerging markets as a whole right now…"

1. 10 reasons for staying
cautious on emerging markets
2014 Nutmeg Saving and Investment Limited

2. “The decision in the US to reduce its bond-buying program, coupled with slow Chinese
growth, has caused a lot of uncertainty in emerging markets in recent months.
With the valuations of emerging market stocks falling, some investors actually see it as a
good time to invest in them, but our view remains that the inherent risks far outweigh any
small pockets of good value that may exist.
At Nutmeg, we decided to sell our emerging markets investments in June last year and our
customers’ portfolios are more oriented towards developed market equities. In 10 charts,
here’s why we think it’s prudent to be wary of emerging markets as a whole right now…”
Shaun Port, Chief Investment Officer, Nutmeg
February 2014
2014 Nutmeg Saving and Investment Limited

3. 1. Higher growth does not mean higher equity returns
2014 Nutmeg Saving and Investment Limited

4. 2. Emerging markets enjoyed big tailwinds in the five years
before the financial crisis – it’s unlikely to happen again
2014 Nutmeg Saving and Investment Limited

5. 3. Growth in China,
a big driver of
emerging markets,
is likely to be
lower this decade
than the previous
10 years
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6. 4. Growth across the
range of emerging
market countries is
now looking weak
2014 Nutmeg Saving and Investment Limited

7. 5. The outlook for commodity markets is poor
2014 Nutmeg Saving and Investment Limited

8. 6. Restored
competitiveness in
developed markets
is now increasing
competition and
therefore damaging
emerging markets
2014 Nutmeg Saving and Investment Limited

9. 7. Structural issues
have not been
resolved in many
emerging markets exchange rates
versus the US
dollar are declining
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10. 8. Emerging
markets are cheap
compared to 20032007 but not
compared to the
past 20 years
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11. 9. One emerging market equity market is not like another
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12. 10. Investors are only now starting to review emerging
market allocations, so a further sell-off may be coming
2014 Nutmeg Saving and Investment Limited

13. 2014 Nutmeg Saving and Investment Limited