The case for emerging market equities in an era of transitioning secular drivers
The drivers of emerging market equity returns are evolving as innovation and economic decoupling join favorable demographics as future sources of excess returns. The Emerging Market Equities Team believes that while the asset class’s potential has increased, it must be approached in a risk-aware manner that prioritizes selectivity.
6 minute read
Key takeaways:
- In the past, EM equities offered opportunities to capitalize on economic growth differentials, convergence and outsourcing. Today, EM companies provide valued-added innovation with strong potential for future earnings growth.
- Reformist governments are supporting the private sector to achieve national objectives such as health care delivery, energy security, and improved access to financial services.
- With an active, risk-aware EM approach, investors can gain exposure to the secular themes of innovation, decoupling and favorable demographics within an increasingly evolving asset class.
The widening range of economic and market outcomes for emerging markets can often lead to periods of increased market volatility. How can a multi-lens approach premised on country, company and governance better capture excess returns, and potentially dampen the volatility inherent in the asset class?
Note: There is no guarantee that past trends will continue, or forecasts will be realized.
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Emerging market: the economy of a developing country that is transitioning to become more integrated with the global economy. This can include making progress in areas such as depth and access to bond and equity markets and development of modern financial and regulatory institutions.
Volatility: the rate and extent at which the price of a portfolio, security or index, moves up and down. If the price swings up and down with large movements, it has high volatility. If the price moves more slowly and to a lesser extent, it has lower volatility. The higher the volatility the higher the risk of the investment.
JHI
All opinions and estimates in this information are subject to change without notice and are the views of the author at the time of publication. Janus Henderson is not under any obligation to update this information to the extent that it is or becomes out of date or incorrect. The information herein shall not in any way constitute advice or an invitation to invest. It is solely for information purposes and subject to change without notice. This information does not purport to be a comprehensive statement or description of any markets or securities referred to within. Any references to individual securities do not constitute a securities recommendation. Past performance is not indicative of future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
Whilst Janus Henderson believe that the information is correct at the date of publication, no warranty or representation is given to this effect and no responsibility can be accepted by Janus Henderson to any end users for any action taken on the basis of this information.
6 minute read
Key takeaways:
- In the past, EM equities offered opportunities to capitalize on economic growth differentials, convergence and outsourcing. Today, EM companies provide valued-added innovation with strong potential for future earnings growth.
- Reformist governments are supporting the private sector to achieve national objectives such as health care delivery, energy security, and improved access to financial services.
- With an active, risk-aware EM approach, investors can gain exposure to the secular themes of innovation, decoupling and favorable demographics within an increasingly evolving asset class.