Dead money. That could be the best way to describe emerging market equities since the Great Recession. Emerging market stocks were synonymous with fast growth, high volatility, and torrid returns for decades until the credit crisis popped the bubble. In the years since, they have suffered, underperforming U.S. and developed market assets in a big way.
But the seas could be shifting.
After years of low returns, emerging markets are hot again. Driven by changes in the geopolitical landscape, rising commodity demand, and the preserved end of ‘American Exceptionalism’, EM equities have started to take off. The best part is that many of the trends in place could help propel them further, far into the quarters ahead. After years of underweighting emerging markets, the time to overweight could be at hand.
