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By Scott Burns | 09-01-2010 11:04 AM

Semple: Constructive on Emerging Markets

Though they've traditionally traded at a discount to developed markets, emerging markets will command a growth premium going forward, says David Semple, Van Eck's director of international investment.

Scott Burns: Looking for opportunities in emerging markets.

Hi there. I'm Scott Burns, Morningstar's director of ETF research coming to you live from Morningstar's premiere ETF Invest Conference.

Joining me today is Van Eck's director of international investment, David Semple.

David, thanks for being here.

David Semple: Thank you for having me.

Burns: So, David, you did a presentation on the emerging markets. It's a great theme in ETFs. People can now play them either as a broad basket or separately on countries and even small-cap countries. But, you know, you really come from the actively managed side of Van Eck, and you know the reason we asked you to come is to actually talk about from a professional investor's perspective, where are you seeing opportunities in emerging markets today.

Semple: Broadly speaking from the top-down, we're pretty constructive on emerging markets, and I think one of the things to bear in mind is that if you believe in some element of the "new normal" where growth is constrained around the world. The relative growth premium of emerging markets will I think be reflected in the stock market premium of emerging markets.

Traditionally, they've traded a discount to developed markets--[and have been] perceived to be riskier. I think that will change. I think they will become less risky as the capital markets broaden and deepen. And a reflection of the actual growth that they can have compared to developed markets will argue for the flows into emerging markets still being strong as we go forward.

Having said that, they have been fairly popular; expect that to continue. So we're pretty constructive from the top-down.

Burns: And it's interesting when we look at yesterday's emerging markets or 10 years ago emerging markets to today's, there has been a very sizable change in the makeup of those indexes, and really the privatization of those large government-owned enterprises, companies like China Mobile and Petrobras, and a lot of the big Russian metal companies. How has that really changed your approach to looking at emerging markets?

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