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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 one of the broadest selections of strategies to help your clients capture the growth opportunity in emerging markets; there are options to suit a range of client investment goals.

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What are the risks?

Past performance is not a guide to future performance and may not be repeated.

The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of any overseas investments to rise or fall.

Emerging markets generally carry greater political, legal, counterparty and operational risk.

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

Important information:

Schroders has expressed its own views and opinions in this webpage and these may change. This webpage is intended to be for information purposes only.

The material is not an offer, solicitation or recommendation to buy or sell any financial instrument or to adopt any investment strategy.

The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in the webpage when taking individual investment and/or strategic decisions. No responsibility can be accepted for errors of fact or opinion.

Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy.

Past performance is not a guide to future performance and may not be repeated.

The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of any overseas investments to rise or fall.

The data contained in this webpage has been obtained from sources we consider to be reliable. No responsibility can be accepted for errors of fact and the data should be independently verified before further publication or use.

Any references to securities, sectors, regions and/or countries are for illustrative purposes only.

In North America, this content is issued by Schroder Investment Management North America Inc., an indirect wholly owned subsidiary of Schroders plc providing asset management products and services as a US SEC registered investment adviser and in the capacity of Portfolio Manager with the securities regulatory authorities in Canada. For all other users, this content is issued by Schroder Investment Management Limited, 1 London Wall Place, London. EC2Y 5AU. Registered No. 1893220 England. Authorised and regulated by the Financial Conduct Authority.

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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

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EmergingMarkets

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