In this series, our personal finance and markets team explain which funds they have been picking for their ISA or SIPP this year (Read other picks: Tom Stevenson, Jemma Slingo, Rebecca Nunn, Marianna Hunt).
Here, Andrew Oxlade explains why emerging markets funds feature so heavily in his Self-Invested Personal Pension (SIPP).
When picking funds for my pension this year, I’ve been trying to shut out the noise of the recent volatility and considered two broader, meaty questions:
- Should I be worried about the high valuations of stock markets, especially as a ‘pre-retiree’?
- And what is the right proportion of my retirement pot to have invested in a now lagging US stock market?
I can congratulate myself – or thank good fortune – that I had begun to swing money out of the US stock market and toward the UK long before sentiment swung more positively toward the UK.
This wasn’t some great early expectation of tariff wars and the questioning of America’s economic exceptionalism. It was a steady rotation over several years based on valuation. British shares had been trading at a discount for years – part of the Brexit effect – presenting an opportunity. That opportunity peaked by the time of the tariff spat in April last year: the FTSE 100 was 43% cheaper than America’s S&P 500 index, based on a comparison of price-to-earnings ratios.
How I’ve split my money
The geographical make-up of my retirement savings now greatly deviates from the circa 70% allocation to the US that you would typically see in a global stock market tracker fund. My money is spread far more evenly – 25% in the US, 23% in the UK and 21% in Europe. I also have high allocations to Asia and Latin America, which make up 20%. (You can look up your own breakdown by clicking on ‘Account holdings report’ in your Fidelity account summary page).
Valuation is always my guide. In recent years it has also pushed me toward cheap emerging markets (EM). But as ever, being a value investor has required patience and resilience. The never-ending rise of America’s ‘Magnificent Seven’ (or Mag 7) has been a godsend for US growth funds and for tracker funds that are dominated by them. It has made for nervous viewing for those, like me, who reduced their exposure. But that dominance wobbled last April and began to unravel late in 2025.
The case for emerging markets
A rotation out of the US helped pep up demand for investments in Europe, the UK, but particularly for emerging markets. The latter carry large US-dollar-denominated debts, so a falling dollar has been helpful in reducing borrowing costs. But that has just been a near-term trend. More important is the fundamental undervaluation of what are high-growth economies. Re-valuation can be a long time coming but it rewards the patient investor when it arrives.
The data suggests there could be further re-valuing to come. The Fidelity Emerging Markets investment trust, a large holding for me, has nearly doubled since a low last April (as at 2 March 2026). Yet looking at its price to earnings ratio or p/e (a measure of how cheap or expensive an investment is), it still looks relatively inexpensive at 9.5. Consider that the US market is on a lofty p/e of 27, and that broader emerging markets are on a p/e of 16.8.
I also hold the Artemis SmartGARP Global Emerging Markets Equity Fund , which has delivered a 51% return for me since investing last May (to 3 March and ahead of the recent falls in markets). The GARP stands for ‘growth at a reasonable price’ – an appealing approach explained here. Of course, past performance is not a guide to future returns.
My fund pick
On the hope of further revaluation for EM, I have also added Lazard Emerging Markets to my portfolio. This is a fund in our Select 50 list and was also a 2026 fund pick from my colleague Investment Director Tom Stevenson. The managers of the fund regard themselves as value investors, leaning toward unloved shares. In my book, that’s something of a double-value play: value managers fishing in under-valued markets. Their portfolio sits on a p/e ratio of 10.8.
You probably don’t need to be reminded that these are higher risk funds. I have a high proportion of money invested because I tend not to lose sleep when markets fall. I remind myself of the reason I hold the investment and, if the case remains, I buy more.
What about retirement?
The question of risk brings me neatly to my other starting question. As someone who might retire or scale back working days within the next decade, should I worry about the price of markets after an incredible few years of bumper returns?
The answer lies in what I’ve already set out: I am moving away from the higher valued market of the US and toward more reasonably priced markets, such as Europe, the UK, and emerging markets.
But what if I do need some of this money within a decade? Well, frankly I’m hoping I don’t. I intend to continue with fulfilling work as long as I can, as set out in my CHILL approach.
A touch of de-risking
However, best laid plans don’t always play out and so it is sensible to diversify with assets that may not move in tandem with stock markets. That may ease the pain if there are big share selloffs. I therefore have slivers of my retirement savings in gold, commercial property and infrastructure. In particular, I have allocated more to the International Public Partnerships Ltd (INPP). It is an investment trust from our Select 50 list that invests in essential, low risk infrastructure – schools, hospitals, transport and renewables – things people rely on for their daily lives. It is also part of my gradual move into income-orientated investments, which will be needed in retirement. INPP has a dividend yield of 6%.
Despite this diversification and a move toward cheaper markets in attempt to improve my future returns, my portfolio remains relatively high risk. But I believe that’s the right thing to do at my age, and with my attitude to risk. Furthermore, most of the money may not be needed for decades to come, so why move out of equities now?
If it’s too early for my 60-something colleague Tom Stevenson to derisk, then it’s too early for 52-year-old me.
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