Traditional favourites for Australian investors are blue-chip shares and cash-based investment vehicles like term deposits. However, many of these favourites aren’t providing the bottom-line boost and yields investors have previously enjoyed.
A report released by the International Trade Centre suggests investors can achieve healthy returns by investing in developing countries’ small and medium-sized enterprises.
A core component of a nation becoming more developed is forming a middle class at both the individual and business level.
At the business level, this means smaller to medium-sized companies are eyeing productivity and are on the lookout for funding.
Worldwide, there is about $5.2 trillion held by businesses of this nature, according to the report.
Your investment options
Start-ups - A broad range of investors invest in start-ups. Finance for these enterprises comes from family and friends, public funds and venture capital during the initial phase of business.
Foreign direct investment - Mature SMEs do not have access to start-up finance, but they may be able to benefit from the $600 billion of foreign direct investment that flows into developing countries every year.
Specialised investment fund - A typical SME in a developing country is often seeking early-phase or growth capital of a few thousand to a few million dollars, sums too small for a large international investment fund to manage directly.