Time for a Closer Look at Emerging Market Equities
For investors who can look past the volatility and interpret the confusing signals, today’s emerging markets reveal a focused selection of long-term investment opportunities. Unfortunately, the negative or even misleading headlines have led many investors to throw in the towel on emerging market stocks altogether. Yet, emerging market equities currently offer active investors the opportunity to focus on the countries, industries and companies that can continue growing.
Although there are well-founded concerns about rising US interest rates and China’s slowing economy, we believe that certain emerging economies and certain companies operating in those markets show the potential to hold up well even in the face of adversity. In addition, from a timing perspective, recent volatility has created an attractive entry point to initiate or expand a position in high-quality emerging market companies. Since the potential for growth appears focused within pockets of opportunity, we believe active security selection is the key to investing in the current emerging markets environment.
1US Department of State
2Reuters, September 2015
3Reserve Bank of India
5CEIC, China Retail Sales Data, as of August 31, 2015.
6Asian Development Bank
7Ernst & Young, "Hitting the sweet spot. The growth of the middle class in emerging markets," 2013.
Definitions and Important Information
Alpha is a measure of risk-adjusted return. Alpha measures the difference between a portfolio's actual returns and what it might be expected to deliver based on its level of risk.
Gross Domestic Product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period.
Investing in an index is not possible.
MSCI Brazil Index is designed to measure the performance of the large and mid cap segments of the Brazilian market.
MSCI Emerging Markets Index is a free oat–adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets.
MSCI Philippines Index is designed to measure the performance large and mid cap segments of the Philippines market.
MSCI World Index captures large and mid cap representation across 24 Developed Markets countries.
Price-to-Book Ratio (P/B) is the ratio of the share price of a publicly-traded company to its book value per share, which is the company's total asset value less the value of its liabilities.
Past performance is no guarantee of future results.
Investment Risk — There can be no guarantee that any investment 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, legal, political and economic structures in these countries may be changing rapidly, which can cause instability and greater risk of loss. These countries are also more likely to experience higher levels of in ation, de ation 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 US investments.
Mirae Asset Global Investments (USA) LLC is the investment advisor for the Mirae Asset Discovery Funds.