NEW YORK (Reuters) - Emerging markets may now be a safer place to invest than in the recent past, but one should be cautious given that premiums received for the risk taken have shrunk to a near record low, a top international equity fund manager said on Tuesday.
"I can buy the argument that emerging markets are healthy and safer than they used to be -- that's fine, that's clearly the case -- what I don't get is that we have priced it very well in if you look at risk spreads, it's near record lows," said Reiner Triltsch, a portfolio manager specializing in international equities at U.S. Trust, speaking at the Reuters Investment Outlook 2007 Summit in New York.
"You don't get a premium for anything anymore," he said, adding, "I think the risk is not truly reflected."
Beyond the lack of value in the emerging marketplace, Triltsch said he thinks that should there be a breakdown in global markets, an emerging market may be the catalyst.
And though he does not think emerging markets are trouble prone, he named Russia as the likeliest candidate for systemic problems should global demand drop rapidly and in turn lower the need for energy.
"I don't think Russian political situation is as stable as we think it is," he said, adding that its economy has become too dependent on the price of oil.
But Triltsch is not a big fan of Russian companies either, saying that "my colleague says there are no quality companies in Russia. I believe that, too."
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