It’s time for investors to reconsider the “riskiness” that many associate with investing in emerging markets - because the fundamentals are in many cases better than developed markets.That is the view of Christian Deseglise, the managing director and head of distribution for HSBC Global Asset Management’s (HSBC GAM) North American operations.Around one third of the $450 billion in assets invested by HSBC GAM on behalf of private and institutional clients is in emerging markets (EM), making the HSBC one of the world’s biggest asset managers in this segment.“What I believe is wrong is the perception that emerging markets are risky,” said New York-based Mr Deseglise, who is in Bermuda to meet with investor clients and colleagues.“Over the last 10 years, the credit quality and economic fundamentals of many emerging market countries have improved so much that they are now less risky, by many standards, than developed market countries.“The difference in volatility between emerging and developed markets used to be huge, but in the last few years it has been converging. Political risk is still higher in emerging markets, however.“Believing that emerging market countries will continue to grow strongly for the next 20 years may be a stretch, however, so you have to look at them with a degree of caution.”The phrase ‘emerging market’ was first used in the 1980s by former World Bank economist Antoine van Agtmael, but since then the label has become more difficult to attach to many countries going through economic transition. According to Mr Deseglise, the most basic criteria that qualify a country as an emerging market are that it has growth potential and is also creating and strengthening its market framework.Most emerging market (EM) countries came through the financial crisis well, he said, and have experienced a rapid economic rebound and further growth, creating a V-shaped recovery.“Many EM countries had little debt, so they could use stimulative policies without injuring their balance sheet,” Mr Deseglise said. “For example, Brazil cut the tax on car purchases and the car market went through the roof. China came down from a very high level, had a large stimulus programme equal to a very significant proportion of GDP, and rebounded fast.”The China stimulus, worth about $586 billion and announced in November 2008, sparked a rapid recovery and a quick return to double-digit annualised growth. It also caused a rise in demand for raw materials in China, which benefited countries who could provide them, like Australia. But the rapid rate of growth has caused many economists to sound inflation warnings, as EM countries try to stop their growth from hurtling out of control.Several EM countries, including China, have raised interest rates to try to cool their overheating economies. But growing affluence was fuelling one type of inflation that would be particularly difficult to deal with, he said.“Inflation linked to food prices is very difficult to control,” Mr Deseglise said. “As people get richer, they change their diets and eat more meat. It takes seven pounds of grain to produce one pound of meat. As more people eat meat, the impact on grain demand will be huge.“Central banks can’t do much to control food prices. In some emerging markets, food makes up 30 to 40 percent of the consumer price index, so it can have a big impact on inflation.”Mr Deseglise said that one of the impacts of the earthquake and tsunami in Japan earlier this month could be a slowing impact of the global economy through disruption of the supply chain.How much emerging market exposure you should have in your portfolio depends a lot on risk appetite. Some of HSBC’s more aggressively invested funds had a 15 percent exposure to EM, while more conservative funds had five to 10 percent, he said.