Skittish investors searching for growth should take a closer look at emerging markets.

That’s according to an expert panel at 2013 Market Outlook presented by AGF Investment Inc. Wednesday in Toronto.

In recent weeks there has been some movement of assets towards equities and away from fixed-income markets, said David Stonehouse, director, fixed income and portfolio manager, AGF, at the event.

However, he expects a complete move back to equities will be quite slow. This hesitancy to return to equity markets is in large part due to demographics, he said, as many older investors will continue to look for income generating investments.

As well, most investors will not rush back to equity markets because the potential for growth will remain lacklustre for some time, said Stonehouse, as governments around the world continue to deleverage.

“It will take the consumer, the average investor, years to whole-heartedly embrace equities again,” said Stonehouse. “The shift will happen over the course of this decade but it may take a little bit longer than many are anticipating.”

Stephen Way, senior vice president, portfolio manager, global equities, AGF, agrees with Stonehouse that the move towards equities will take time. Way also adds that Canadian investors interested in taking on a little more risk than fixed-income should take a global perspective with a particular emphasis on emerging markets. Emerging markets hold opportunities for investors, said Way, because many of those stocks are selling at a discount today in comparison to the rest of the world.

“The challenge for emerging markets over the last few years has been that profit margins have come down quite a bit,” he said. “But I actually view that very positively going forward because the opportunity for margin improvement is now in front of us.”

Way is paying particular attention to Turkey, South Africa and India. The first two are positioned well for growth, said Way, because their consumers are not as leveraged as other people globally.

India’s growth potentially stems from recent government reforms. Specifically, the Indian government has recently allowed for more direct foreign investment into the retail and airline sector. These reforms will help to improve the competitiveness of the economy, Way said, and have “spurred a bit of a rally” in the Indian market.