You've heard of BRIC (Brazil, Russia, India and China) and maybe CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa). So enough already with the acronyms in emerging markets, right?
No way, says Alexander Kozhemiakin, managing director at Standish Mellon Asset Management Co. LLC, the Boston fixed-income specialist for BNY Mellon Asset Management.
Mr. Kozhemiakin says the 30-year-old term “emerging markets” itself needs to be replaced with ASTERISCS, or “ASsets Tied to Economies of RISky Countries.”
The silliness (and slight condescension) of the term aside, Mr. Kozhemiakin makes a strong case for replacing the aging appellation in a 28-page white paper arguing for his term's wider use. He says an investment concept should have at least several of seven key characteristics, including: resonance (“is the term catchy?”), consistency, ease of measurement and utility.
“Emerging markets” falls down on most of his criteria, but most importantly on consistency. That is, does the term mean the markets themselves or the countries in which they are based? Too often it's used to mean both, which is “potentially problematic” given that a country can have multiple markets (equity, bond, currency, real estate, etc.) according to the white paper, “Emerging Markets as ASTERISCS.”
And the “emerging markets” concept is “ambiguous, if not outright misleading,” Mr. Kozhemiakin writes, because it “may bundle together many attributes, but it is not clear what exactly they are or how they can be measured.”
ASTERISCS, on the other hand, “provides investors with a more transparent and differentiated way of combining risk exposures across different asset classes in portfolios,” according to the white paper.
