Many of you may agree that any exposure to Emerging Markets has continued to disappoint. However, this is not the time to diversify away from this sector of the market; in fact, quite the opposite is true.
We need to keep in mind that ultimate success in long-term investing really boils down to the fundamental factors at work. For instance, earnings growth in the developing nations has been less than ideal and has been a major factor in the negative returns over the past few years.
Though some of these countries have been experiencing economic recessions (Russia and Brazil), there are pockets of economic strength in several other Emerging Market countries. Our research indicates there are emerging market economies where valuations have normalized and earnings growth is beginning to improve over the long term.
With the evolution in many of these countries, it is important to take a more granular approach to capturing the positive trends. The managers of our Emerging Market allocations are focusing on the best opportunity sets in this complex market.