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Six Sources of Alpha in Emerging Markets

By Advisor Perspectives
Financial Services

The emerging markets (“EM”) equity asset class has evolved considerably over the past decade such that many active EM equity managers may find it challenging to create long-term alpha over the benchmark. Countries such as China and India are moving to the fore, historical drivers of growth are changing and technology, innovation and health care are becoming a larger part of the opportunity set. It has been difficult for EM investment teams to keep up with these changes.

The good news is that investors can adapt their EM allocations through a thoughtful combination of strategies to enhance opportunities for long-term outperformance. The thesis for outperformance is fairly straightforward—combine exposures such that you address the largest weight biases, current shortcomings and forward-looking attributes of the MSCI Emerging Markets Index. What does that mean specifically?

Read more at Advisor Perspectives.

Photo: aotaro

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