Scoring the winner at the World Cup 2014: Which of the qualifying countries look the most appealing to investors?
We have consulted our own panel of World Cup investment pundits, made up of leading financial advisers and commentators, to establish which regions and countries have the most to offer – and which are best avoided.
Saturday 07 June 2014
Football's showpiece event – the 2014 Fifa World Cup– is just five days away, with 32 national teams hoping to be crowned the champion.
Five-times winners Brazil, as well as the current holders Spain and regular finalists Germany, are among the favourites to pick up the coveted trophy at the end of the tournament.
But which of the qualifiers look the most appealing to investors? We have consulted our own panel of World Cup investment pundits, made up of leading financial advisers and commentators, to establish which regions and countries have the most to offer – and which are best avoided.
No country from the continent has ever won the World Cup ,and even though the chances still look pretty slim this time around the region is full of potential – and that's exactly how many investors viewit.
Africa has successfully weathered internal and external shocks and is poised to achieve healthy economic growth rates, according to the annual African Economic Outlook report, produced by groups including the African Development Bank.
"Foreign investment – direct and portfolio – has now fully recovered and is projected to reach a record $80bn (£47.8bn) in 2014," it states. "Poverty levels are falling, and education and health outcomes are improving."
Those in favour of the region talk about the tremendous growth opportunities it offers, with the prospect of the continent following the same developments that have occurred in other emerging markets. But critics suggest it's too volatile and unpredictable to be a realistic option for all but the most experienced investors.
Ways to get exposure: There aren't many Africa-focused products but among those offering exposure is the Neptune Africa Fund, managed by Shelley McKeaveney.
It offers a focused portfolio of 30-50 stocks with a minimum of 50 per cent in South African equities. It also has exposure to other countries such as Nigeria, Botswana, Kenya and Senegal.
Conclusion: Justin Modray, founder of Candid Financial Advice, says: "I remain wary of investing in Africa due to corporate governance. Investment controls are far too lax for me."
In footballing terms Asia has never set the world alight – even though Japan surprised the world in 2002 by winning a group that also featured Russia, Belgium and Tunisia. They subsequently lost to eventual third-place finishers Turkey.
Investment-wise, Australia has benefited massively from the boom in commodities' consumption in recent years, but remains something of a one-trick pony on the global stage, according to Mr Modray.
"Asia remains a manufacturing powerhouse, with financial services and other service industries growing fast thanks to rising affluence," he says. "But there will be some bumps along the way, with political issues and growing pains both potential problems."
Japan, he adds, is emerging from the doldrums, but faces an uphill struggle to recapture former glories. The stock market did well last year but has since disappointed, agrees Andrew Merricks, head of investments at Skerritt Consultants. "Most people go into Japan at the wrong time," he says. "Now there are a lot coming out, so that may be a good sign as no one ever seems to get the timing right."
The IMA Asia Pacific including Japan sector has had a tough year, with the average fund down 7.59 per cent, according to Morningstar data to 5 May 2014, but over the past 10 years it is up 109.66 per cent.
Ways to get exposure: A general Asian or emerging markets fund would be the most sensible way to invest in this region. There are specialist Japan funds, for example, but they should only be a relatively small part of an average investor's portfolio.
Conclusion: Mr Modray says: "I think it's wise to have exposure to Asia in most investment portfolios provided you are not averse to taking some risk."
Ekoto of Cameroon and Germany's Mueller in a pre-Cup friendly (AFP/Getty Images)
The most successful of the regions in World Cup terms, with 10 wins out of the 19 tournaments played. Italy have been crowned champions four times and Germany three times, while France, England and Spain all have one title to their names. If only the economic prospects were as upbeat as their tournament track record – but the outlook seems to be improving.
The region is home to some global giants, and these are making decent profits and have large amounts of cash on their balance sheets, giving investors cause for optimism.
The European Central Bank has also stated it will do whatever is necessary to support the region's economies, but it would be foolhardy to assume all problems are resolved, warns Patrick Connollyfrom Chase de Vere. "While European economies are improving, with Spain, Italy, Portugal and Ireland having taken significant steps, there are still ongoing risks including high levels of unemployment, sluggish economic growth and the threat of deflation," he says.
Ways to get exposure: There is the IMA Europe excluding UK sector, the IMA Europe including UK sector, and the IMA European Smaller Companies sector, all of which have gone up by double figures over the past year, according to Morningstar. Connolly suggests funds worth a look include JPM Europe Dynamic, Threadneedle European Select and Henderson European Growth.
Conclusion: Mr Connollysays it's clear that while there is no quick fix in the eurozone, "some of the tail risks seem to have gone and European shares should merit a role in most investment portfolios."
North/Central America and Caribbean
The United States came joint-third in the first World Cup in 1930 – which remains the best placing for any team outside Europe or South America.
The football team has performed better than expected in some competitions, and it's been a similar story with investing, says David Burren, managing director of Warwick Butchart Associates. "It hasn't had the equity re-rating that we've had in the UK and I suspect growth will be greater than estimated," he says. "They've also got advantages, such as in energy, while people can see a return of US manufacturing."
The economy has been showing signs of improvement and you can't ignore the fact that it has the world's largest and most commented-on stock market.
Mark Dampier, head of research at Hargreaves Lansdown, has selected the Legg Mason US Smaller Companies portfolio for a position in his Wealth 150 list of recommended funds. "We believe this is a well-resourced team offering exposure to an attractive area of the market," he comments.
Ways to get exposure: The IMA North America sector or IMA North American Smaller Companies. Over the past year the average fund in these areas has risen 9.96 per cent and 12.61 per cent respectively.
Conclusion: Mr Burren says: "The US is still likely to do very well. I continue to think it is a very strong place to be."
It may be a powerhouse of the footballing world thanks to the exploits of Brazil, Argentina and Uruguay, but the region is still very much in the emerging camp when it comes to investing and is regularly described by observers as "unpredictable".
Investment in this region effectively means putting your money into Brazil or Mexico, by far the most dominant countries, according to Darius McDermott, managing director of Chelsea Financial Services.
"There are Chile and Peru, but they are such a small part of the benchmark as to be right on the edge of genuine interest," he says.
Brazil has had a challenging year with unrest forcing down valuations. As a result, the stock market is relatively cheap in historic terms. The region remains volatile. Mexico has performed well but it's not cheap in a historic context.
Ways to get exposure: A global emerging markets fund will give you broad access to South America whereas a focused Latin America fund will provide you with increased exposure to Brazil and Mexico, as well as Chile and Peru, albeit to a lesser extent.
Conclusion: Mr McDermott says: "South America is worth considering for investors, but all emerging markets can be volatile. If the unrest is overcome, you can see Brazil having a spectacular summer, with the World Cup and the Olympics still to come to truly showcase the nation."
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Shock poll shows voters believe Ukip is to the left of the Tories
Nigel Farage's approval rating hits record low as popularity suffers in wake of Ukip sex scandal
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Germany sees 'visible rise' in support for far-right extremism in response to perceived 'Islamisation' of the West
iJobs Money & Business
£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...
£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...
£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...
£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...
Day In a Page
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens