Investors looking for income have more upside potential in emerging markets than they do in the United States or Europe, and a couple of countries that might not typically come to mind are particularly attractive, says Eric Stein, CFA, a vice president of Eaton Vance Management and a portfolio manager on Eaton Vance's global fixed-income team.

Stein says Uruguay is seeing a boom in foreign investment because its president, a former Marxist guerilla, has changed his tune and is now welcoming foreign investment. Malaysia also is attractive because it's rich in resources, including palm oil, crude oil and rubber, that make good exports; it has a strong central bank and a government that encourages private enterprise; and a strategic location, all of which make it a good growth story, Stein said today at the inaugural Fiduciary Gatekeeper Research Manager Summit, sponsored by Financial Advisor and Private Wealth magazine, in Boston.

While the United States and Europe are still better places to do business than either of those countries, it's marginal changes that drive asset prices, Stein said. On the margin, Uruguay and Malaysia are among the countries where it's gotten better to do business over the last year, while in the United States and in Europe it's gotten a little worse, he added.

Europe, where Greece is expected to default before the end of this year, has two problems, a debt problem and a competitiveness problem, Stein said. Greece isn't as big of a threat to world economic stability as are the financial troubles of Italy, Portugal and Spain, he added. And now that they are part of the Eurozone, they can't devalue their currencies to buy their way out of their problems, he added, noting his fund is shorting investments in those countries. However, he believes that progress is being made in Europe to solve its financial problems, with plans in place to recapitalize many banks. However, the region has a way to go before it is on a clear path out of its troubles, he said.

One big problem in many countries, such as the United States, is that interest rates are so low and that combined with other policies have caused "financial repression," he said. "Financial repression is, in a nutshell, really a tax government imposes on savers to fund debt," Stein commented.

But financial repression isn't limited to Western governments, he said. "China is one of the most financially repressive economies out there," Stein said. China is going through a slowdown but Stein doesn't think the country will have a hard landing and his fund is long on the currency.