Compelling Opportunities in Emerging Markets

Compelling Opportunities in Emerging Markets

Emerging market (EM) equities pulled back in 2018, decoupling from US equities due to trade disputes, rising interest rates, a stronger US dollar, and rising political risks. With these factors improving, a potential US and China trade resolution on the table, and a US interest rate easing cycle, we believe EM equities are attractive on an absolute and a risk-reward basis.

We remain positive on the asset class and believe that the rare combination of compelling valuations, higher growth potential, and attractive positioning will lead to a re-rating. Looking ahead, we believe that emerging markets are positioned for a significant rally.

Investment Considerations — There can be no guarantee that any strategy (risk management or otherwise) will be successful. All investing involves risk, including the potential of loss of principal.

Emerging Markets Risk — The risks of foreign investments are typically greater in less developed countries, which are sometimes referred to as emerging markets. For example, political, legal and economic structures in these country may be changing rapidly, which can cause instability and greater risk of loss. These countries are also more likely to experience higher levels of inflation, deflation or currency devaluation, which could hurt their economies and securities markets. For these and other reasons, investments in emerging markets are often considered speculative. Similarly, investors are also subject to foreign securities risks including, but not limited to, the fact that foreign investments may be subject to different and in some circumstances less stringent regulatory and disclosure standards than U.S. investments.