March 23, 2018

Wealth Management

World View

Florida wealth managers are betting on oversea markets.

Barbara Miracle | 10/1/2007
As the U.S. economy grew 3.2% last year, the economy of China grew 10.7%. India’s expanded 9.2%; Kazakhstan’s, 10.6%; Vietnam’s, 8.2%; and Mexico’s, 4.8%. Growth in many overseas markets is outpacing the U.S. economy, which is expected to slow rather than expand next year. “The outsized growth over the next 15 to 20 years is probably coming from outside the country,” says Jeff Saut, chief investment strategist for St. Petersburg-based Raymond James.

[Art: Cabry Cyrill]

Keith Dubauskas, vice president at Citi Private Bank in Palm Beach, echoes that belief. “Half the opportunity set is outside the U.S.,” he says.

Florida wealth managers interviewed by Florida Trend are recommending 20% or more of an average stock portfolio be invested internationally. For an individual investor, that typically means mutual funds, exchange traded funds (ETFs) or foreign stocks that trade in U.S. markets through American Depositary Receipts, or ADRs.

Many Florida investment managers go beyond the vehicles readily available in the U.S., however, and look for small companies in niche markets in developing countries. Boca Raton investment manager Robert Levitt spends much of his time traveling to investigate opportunities from the Ukraine to Brazil. “Our bet is that developing economies are going to grow faster than the OECD economies,” he says.

Interest is particularly high for companies that cater to the burgeoning middle class in developing nations. Also, there’s a need for roads, sewers, communications networks and other facilities. Jim Grinney, chief investment officer for Florida at Northern Trust, says, “I think that one thing you could use with almost any country is the whole infrastructure idea.”

Jeff Saut [Photo: Mark Wemple]

Jeff Saut
Chief investment strategist
Raymond James, St. Petersburg

Recommended international allocation: 20%
International strategy: Overlay a diverse international fund with exchange traded funds for specific countries.
Emerging markets he likes: > Thailand, Malaysia, Indonesia, Brazil, Peru, Kazakhstan and Mexico. One emerging market of particular interest is Vietnam because, like China, it has continued to build a middle class, says Saut. But it’s a difficult country to invest in because the purchase of Vietnamese securities must be settled in only one day (compared to three in the U.S.).
Markets he’s concerned about: » France and Italy — “I think there is a problem. It has nothing to do with politics.” They both have low birth rates. The two countries are importing workers but not assimilating them well. » China — “There’s going to be a banking accident,” says Saut. “I don’t know when it is going to happen.” » Russia — ”We’ve taken all of our money off the table in Russia. I don’t like what Putin is doing over there.” » Japan — “Japan is virtually shutting down,” he says, voicing concern about the labor force and Japan’s unwillingness to import workers.

Tags: North Central, Banking & Finance

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