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Gensler: Whole World Depending on the Emerging World

The T. Rowe Price Global Stock Fund manager likes emerging markets' self-financed growth, very high savings rates, and improved corporate and government balance sheets. Plus, Gensler on getting comfortable with emerging markets capitalism.

Gensler: Whole World Depending on the Emerging World
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John Coumarianos: Another thing I wanted to ask about, something that's really distinctive about your fund versus the other funds that we compare it to in the global or the world stock category at Morningstar, is that you have a healthy amount of emerging markets exposure. I think you have nearly 20% emerging markets exposure and that puts you in the top 20% of the category. Explain your attraction to emerging markets.

Rob Gensler: Right, well, that's where all the growth is. It's just not that complicated. It's also a lot of volatility and all. But when you step back, the emerging worlds are a third of global GDP. It's only 13% of the free market cap in the benchmark. Remember, emerging markets are about 26% or 27% of true market cap in the world. So am I overweight in emerging markets or underweight? I'm being frank about that. You have a backward looking benchmark that is free-float adjusted. As an investor, I'm not a free-float adjusted investor. I just invest in opportunity. But when we're talking about the opportunity, it's a third of world GDP, a 32% savings rate, a 30% investment rate. So here you have a very high investment rate. In the U.S., it's only 11% or 12% investment rate, Europe's 18%, Japan's 20%. You have a very high investment that's driving growth, you have the industrial revolution happening 200 years later type of thing, and it's self financed.

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John Coumarianos does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.