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Emerging Markets

In-depth expertise to help capture the emerging market growth opportunity

Significant growth potential

The importance of emerging markets in the global economy has increased significantly, driven in large part by China. In 1980 emerging economies represented around 20% of global GDP. Today their share is 40%¹.

Their capital markets have developed and deepened during this period, but their economic importance remains under-represented.

Emerging markets represent around 23%² and 18%³ of tradeable equity⁴ and debt⁵ markets respectively, but only 13% and 6% of the most widely-used equity and debt benchmarks. This anomaly cannot be ignored.

Emerging markets are changing

We expect emerging markets to continue to grow faster than developed economies. Industrialisation, urbanisation and middle class wealth creation should result in a deepening and liberalisation of capital markets, so that over time they will better reflect the economic opportunity and importance of the emerging world.

Rising wealth levels within emerging markets are likely to contribute to increased demand for emerging market equity and debt and lead to the development of nascent savings markets.

An active investment approach may be best

We believe emerging markets are inefficient and poorly researched.

State-controlled companies still represent a significant weight in emerging equity indices. The performance of these companies can be heavily influenced by sudden changes in government policy. An active approach which draws on deep local resources is better able to navigate such events.

Similarly, a great deal of qualitative input and local knowledge is required to identify the environmental, social and governance (ESG) issues which can create significant performance differential in emerging markets.

In emerging market debt, not only do passive exchange-traded funds (ETFs) tend to underperform their benchmarks, the most widely used indices are narrowly focused and exclude a large portion of the opportunity set. Active management provides access to the full range of emerging market debt.

Why Schroders?

We have almost 130 emerging market investment professionals in 14 locations worldwide covering a range of emerging market assets*. Our specialist teams have developed their own investment processes, free from a centrally-developed “one size fits all” approach. This means there is considerable intellectual debate between different teams, who will challenge and scrutinise each other’s views. Together with our deep roots in in many emerging countries, including a number of local-to-local business units, joint ventures and partnerships, we are in a strong position to better manage your clients’ investments and deliver the outcomes our clients require.

A world of choice

We do not just specialise in one area. Our expertise spans equity, fixed income, multi-asset, quantitative investment and private assets. This means we offer a broad selection of strategies to help your clients capture the growth opportunity in emerging markets; there are options to suit a range of client investment goals.

¹Source: IMF as at end December 17. ² Source: Factset, MSCI as at end of December 2017. ³Source: Bank of America Merrill Lynch Global Research, December 2016 ⁴ MSCI AC World. Source Factset, MSCI as at end December 2017 ⁵Bloomberg Barclays Global Aggregate. Source: FIA as at end December 2017

*Source: Schroders as at 30 September 2019

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The contents of this document may not be reproduced or distributed in any manner without prior permission.
This document is intended to be for information purposes only and it is not intended as promotional material in any respect nor is it to be construed as any solicitation and offering to buy or sell any investment products. The views and opinions contained herein are those of the author(s), and do not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. The material is not intended to provide, and should not be relied on for investment advice or recommendation. Any security(ies) mentioned above is for illustrative purpose only, not a recommendation to invest or divest. Opinions stated are valid as of the date of this document and are subject to change without notice. Information herein and information from third party are believed to be reliable, but Schroder Investment Management (Hong Kong) Limited does not warrant its completeness or accuracy.
Investment involves risks. Past performance and any forecasts are not necessarily a guide to future or likely performance. You should remember that the value of investments can go down as well as up and is not guaranteed. You may not get back the full amount invested. Derivatives carry a high degree of risk. Exchange rate changes may cause the value of the overseas investments to rise or fall. If investment returns are not denominated in HKD/USD, US/HK dollar-based investors are exposed to exchange rate fluctuations. Please refer to the relevant offering document including the risk factors for further details.
This material has not been reviewed by the SFC. Issued by Schroder Investment Management (Hong Kong) Limited.

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Investment involves risk. Past performance is not indicative of future performance. You should remember that the value of investments can go down as well as up and is not guaranteed. You may not get back the full amount invested. Please refer to the relevant offering document including the risk factors.

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Emerging Markets

In-depth expertise to help capture the emerging market growth opportunity

Significant growth potential

Emerging markets are changing

An active investment approach may be best

Why Schroders?

A world of choice

Explore all Strategic Capabilities

Alternatives

AlphaEquity

Credit

EmergingMarkets

Income

Multi-AssetSolutions

Sustainability

Private Assets

Solutions

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