Why Emerging Markets?

We believe that emerging and frontier markets offer attractive investment opportunities, thanks to long-term trends in demographics, deregulation, offshore outsourcing and improving corporate governance.

Why Emerging Markets and Frontier Markets Now?

  • Great opportunity exists for active management, thanks to recent passive flows and index dislocations.
  • Rising inflation expectations are generally positive for Emerging and Frontier equities and commodities.
  • Higher U.S. and global growth expectations are good for Emerging/Frontier Markets.
  • Valuations are favorable relative to U.S. equity markets and the history of Emerging and Frontier Markets.

  • Earnings momentum, free cash flow yields and dividend payouts are rising.
  • The gradual rise in energy prices may be positive for many oil-linked economies that have been under pressure.
  • Frontier markets have even lower correlations and may be fairly insulated from global volatility.
  • Most investors are still underweight the asset class.

Higher Gross Domestic Product growth rates may help drive profits and returns.

Demographic dividends can drive regional and domestic growth.

Emerging markets offer compelling diversification benefits for long-term investors.

Demographic Dividends May Drive Regional and Domestic Growth.

Median Age, 2015

Much of Africa, Asia, and Latin America have young and growing population.

Median Age, 2030

Larger labor forces as a % of a country’s population can mean greater economic activity, consumption and GDP growth.

*Source UN Population Division (Median Age) 2015 Revision.
Note: 1950 to 2015 show historical estimates. From 2020 the UN projections (medium variant) are shown.
For Illustrative Purposes Only.

Higher Growth Rates May Help Drive Profits and Returns.

REAL GDP GROWTH
(Annual % Change)*
2023
(Projected)
China 5.5
Vietnam 6.5
India 8.2
Indonesia 5.6
Pakistan 5.0
United States 1.4
Euto Area 1.4
Japan 0.5

*Source ©IMF, 2018, World Economic Outlook (April 2018)
For Illustrative Purposes Only.