Extracting growth alpha in emerging markets

■ Emerging markets are home to the world’s fastest-growing economies and their long-term equity returns have
attracted investment flows. In the past several years, however, many investors may have been disappointed by
lacklustre results from their emerging markets allocations.

■ Investing in emerging markets companies with strong secular growth can lead to significant alpha generation over
time and we believe the best way to capture this is to focus on the structural growth latent in select emerging
markets companies.

■ In our view, the emerging markets growth trajectory remains strong and the disconnect experienced by some
investors may be attributed to indexes and low-tracking error investment approaches that have been slow to reflect
fundamental changes in emerging markets growth dynamics.

■ As most mainstream emerging markets indexes underrepresent dynamic secular growth companies, we believe
portfolios are best constructed agnostic of index geographic and sector weights.

 

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