Global equities investor Bell Asset Management has been building its Japanese exposure, but says emerging markets such as Thailand also offer an "interesting" opportunity.

Despite concerns over demographics in developed markets like Japan and the United States, it doesn't mean there aren't appealing investment opportunities, according to the fund's chief executive and portfolio manager Ned Bell.

"We think that Japan will continue to be an outperformer over the next two or three years, especially in the context of the US market having done extremely well over the past two years," Mr Bell told InvestorDaily.

"On a regional basis, we have become more positive on Japan ... Japan is definitely an area of interest in terms of building our exposure there," he said.

The fund has avoided excessive exposure to China recently, noting some "serious corrections" over the past two to three years. However, "that is typically when we start to get interested – when something has unperformed," Mr Bell said.

"China and emerging markets is something that we will focus a little more on in the second half of this year," he said.

Asset managers don't need to directly buy companies listed in those regions to gain access. They can also gain sales exposure through multinational companies that play on growth themes in the area, Mr Bell noted.

"Right now, our sales exposure to emerging markets is probably around 14 per cent [down from] 25 per cent a year and a half ago. But in terms of that direct exposure to emerging markets, we actually have zero right now," he said.

But one other area in emerging markets that is interesting is Thailand and the Association of Southeast Asian Nations (ASEAN) region, according to Mr Bell.

"I was in Thailand last year and it is really interesting – there are some really good Thai companies that we've been doing some work on," he said.

"They don't use a lot of leverage [because] they're still terrified from the Asian financial crisis, but they're quite well managed companies and they're very leveraged into the ASEAN economic region."

Other ASEAN countries like Cambodia, Myanmar and Vietnam are becoming more appealing as they are starting to work together a bit better, according to Mr Bell.

"Within emerging markets, developing Asia is probably more of a focus. Eastern Europe and South America are not really top of the list," he said.

"South Africa is another market that we've looked at ... and the conclusion was that there are some very good companies in South Africa but there's a lot of political risk that comes with that, and currency risk."

By Chris Kennedy

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