Presentation By Wells Fargo Team
February 15th, 2011
A team of three from Wells Fargo and its subsidiaries viz. (1) Sean Lynch, Global Investment Strategist for Wells Fargo Private Bank (2) Paul Christopher, Chief International Investment Strategist for Wells Fargo Advisors (3) Neville Javeri, Senior Vice President and the National Value Strategy Manager for Wells Fargo Private Bank, had visited India for the first time to evaluate various investing opportunities. At the end of their tour IAIP organized a speaker event with them which was level attended. Though they were biased towards their homes for investment, world offered opportunities. There has been globalization of consumerism and businesses. The per-capita incomes in the emerging markets are still quite low and had scope for improvement. The top emerging economies have been contributing 51% to the global GDP compared to 49% by developed market. Around 300mn jobs were created in past 10 years in emerging economies which is twice the workforce of the US. Global deleveraging had slowed down economic growth as businesses cut debt first followed by consumers. Hence the recovery has been uneven. The developed markets were facing risks of deflation whereas the emerging markets were grappling with inflation.
According to their studies strategic allocation was the key factor in overall portfolio returns determining 77% of investment performance, followed by tactical allocation at 6%, security selection at 10% and other factors making for the balance 7%.
Valuations world wide were attractive versus their long term averages. The one year forward P/E multiples as on date for S&P500 was 14x, World Ex-US at 13.3x, MSCI Emerging Market at 13.0x and MSCI Frontier Market at 11.2x.
The key factors weighing against Indian markets were inflation, corruption, dependence on foreign portfolio flows and lack of domestic support buying.