As a result of improving macro economic conditions, we have seen the MSCI Emerging Markets Index clearly outperform the MSCI World Index over the past 10 years. However, despite the impressive returns, the emerging world still remains a somewhat volatile market for investors. Since 1988, the asset class has experienced 11 drawdowns lasting at least three months, as illustrated in Exhibit 1. If we wish to mitigate these losses and achieve higher risk-adjusted returns, we require a sufficient degree of diversification. We can generate alpha by diverging from the multiple investment styles that have evolved in the emerging markets space and embracing an active management approach. As Exhibit 2 overleaf shows, the growth of these styles has gone hand in hand with the growth of the market itself. We will specifically be discussing the benefits of allocating to emerging markets relative growth and emerging markets relative value within an emerging markets equity portfolio.
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As a result of improving macro economic conditions, we have seen the MSCI Emerging Markets Index clearly outperform the MSCI World Index over the past 10 years. However, despite the impressive returns, the emerging world still remains a somewhat volatile market for investors. Since 1988, the asset class has experienced 11 drawdowns lasting at least three months, as illustrated in Exhibit 1. If we wish to mitigate these losses and achieve higher risk-adjusted returns, we require a sufficient degree of diversification. We can generate alpha by diverging from the multiple investment styles that have evolved in the emerging markets space and embracing an active management approach. As Exhibit 2 overleaf shows, the growth of these styles has gone hand in hand with the growth of the market itself. We will specifically be discussing the benefits of allocating to emerging markets relative growth and emerging markets relative value within an emerging markets equity portfolio.
Click on the image below to download the full version of this article
As a result of improving macro economic conditions, we have seen the MSCI Emerging Markets Index clearly outperform the MSCI World Index over the past 10 years. However, despite the impressive returns, the emerging world still remains a somewhat volatile market for investors. Since 1988, the asset class has experienced 11 drawdowns lasting at least three months, as illustrated in Exhibit 1. If we wish to mitigate these losses and achieve higher risk-adjusted returns, we require a sufficient degree of diversification. We can generate alpha by diverging from the multiple investment styles that have evolved in the emerging markets space and embracing an active management approach. As Exhibit 2 overleaf shows, the growth of these styles has gone hand in hand with the growth of the market itself. We will specifically be discussing the benefits of allocating to emerging markets relative growth and emerging markets relative value within an emerging markets equity portfolio.
Click on the image below to download the full version of this article