Emerging markets are the fast-growing economies that drive the world’s growth. When you look at the numbers, their scale and importance are undeniable for investors.
Emerging Markets - by the numbers
Source: IMF & IMF Datamapper April 2019.
How to invest in emerging markets
Around 70 vastly diverse countries make up the universe of emerging markets1. They have enormous economic potential. But they are also complex and inefficient markets, both for bonds and equities. Which is why we believe it’s essential for anyone looking to invest in these markets to take an active approach.
Our investment managers are specialists in the countries they cover. They are further supported by our global research teams. This breadth of expertise allows us to uncover opportunities that others might miss.
We have developed a wide range of emerging markets investment strategies to suit investor needs, whether this is in equities or bonds, and across countries, regions, or sectors.
Benefits of investing in emerging markets
Investing for a better future
Investing in emerging markets has a number of potential benefits:
More growth potential than developed markets
Opportunities for both income and growth
Innovation and technological leadership
Responsible investing has long been central to our company, which is why we are at the forefront of our industry in incorporating environmental, social and governance (ESG) criteria into all our investment processes – not least for our emerging market strategies.
Integrate ESG factors into all investments processes
Engage with companies and goverments
Exercise voting rights
Act as stewards of responsible investing
Be transparent with clients on EGS criteria
What are the risks?
Emerging markets have undergone a radical transformation over the last decades paving the way for rapid economic growth and greater stability. There are risks, however.
Emerging markets are still more volatile politically and economically than developed markets and some countries have progress to make in terms of their environmental, social and governance values. It’s important to find an experienced manager to manage these risks.
Emerging market investments can be higher risk, more volatile, or denominated in a foreign currency meaning a change in exchange rates could affect their value.
Investments in fixed income may be subject to the default/credit risk of issuers, interest rate risk as bond prices move inversely to changes in interest rates, and liquidity risk. Investing in higher-yielding or non-investment grade bonds might mean the risk of the issuer defaulting on the capital repayment is higher.
Past performance is not a guide to future performance. The value and income of an investment can fall as well as rise and you may not get back the amount originally invested.
WAYS TO INVEST
Emerging Market Equities
Emerging Markets Fixed Income
Experienced investors you can trust
We believe that emerging markets provide compelling opportunities for our hedge fund strategies to outperform the broader market and deliver the uncorrelated returns investors are seeking. We offer the following:
Global macro emerging markets fixed income
Emerging market assets are often subject to volatility – emerging stocks, bonds and currencies can all experience bouts of turbulence. ASW offers a solution which provides access to these assets for investors, but with lower volatility. The strategy aims to generate a positive risk-adjusted return in all market conditions by the use of long/short positions, as well as the ability to invest in a broad selection of assets.
Greater China long/short directional equities
ASW seeks to benefit from the structural winners and losers created by China’s transition towards a consumption-driven, higher value-added, more diversified economy. Our long/short directional equities strategy aims to achieve long-term capital growth and to protect capital in down markets.
We believe that investors focused on long-term growth should capture the enormous economic potential of these dynamic and diverse countries.
Our range of global, regional and country-specific emerging market equities strategies offers investors the potential for investment growth that outpaces more developed markets, as well as income and portfolio diversification.
We believe that the fast-growing economies of emerging markets offer investors the potential for sustainable, long-term returns, and particularly via their large sovereign and corporate debt markets.
We offer multiple ways to access emerging market fixed income:
Provides access to some of the world's fastest growing economies from a potential investment universe of 60+ emerging market countries. This broad approach provides wide-ranging investment opportunities whilst spreading potential risks.
Provides exposure to emerging market bonds without taking on currency risk. This is the most established emerging market debt asset class, comprised of sovereign and corporate bonds issued in major currencies such as US dollars or Euros.
Provides exposure to emerging market debt opportunities in local currency debt instruments, which gives investors the added return potential from local interest rate or currency exposure.
Provides access to the fast-growing opportunity in emerging market corporate bonds, denominated in major currencies such as US dollars or Euros.
Invests in either corporate or sovereign debt and offers a degree of protection from rising rates by focusing on securities with a short duration. Seeks to provide stable and attractive income with limited volatility.
Provides diversified emerging market debt exposure with a focus on ESG factors. As a blended approach, it combines our best ideas from both emerging market hard and local currency bonds.
Bond strategies which focus on regions such as Asia, China, and Latin America, and which seek to capture the vast range of opportunities available in these dynamic markets through a combination of our local expertise and broad research capabilities.
We’ve been early to recognise investment opportunities in these rapidly developing markets.
Our capabilities across the globe reflect our local expertise and commitment to emerging markets.
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