One of the biggest misconceptions about emerging market (EM) equities is that value opportunities are few and far between. This is not surprising, given EMs tend to be associated with high growth investing. Indeed, analysis of the EM equity investment uni- verse confirms this heavy bias, with 87% of all active money invested in either core or growth EM portfolios. Meanwhile, just 13% of all active money is invested in EM value strategies.
This wide disparity highlights the neglected nature of the EM value asset class. For active, fundamental investors, this provides a rich and opportunistic landscape to find good quality stocks that have been overlooked, forgotten or ignored. Given the under-owned and under-re- searched nature of EM value companies, the risk/ reward opportunity is asymmetrical, with limited downside potential and the possibility of com- pounding on the upside.
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