Key insights
Global emerging markets have provided very strong returns for long term investors.
However, investors have to be prepared to accept higher volatility over shorter periods of 3 years and less.
Significant performance dispersions across regions, countries, sectors and styles factors provide substantial opportunities for active managers.
Smart-beta or factor strategies have delivered mixed results – while Minimum Volatility and Sustainability factor indices have delivered strong results, traditional factor indices such as Value and Growth have disappointed.
The level volatility and dispersion of risk factor across major countries continue to rise, reflecting greater geopolitical risks and country level policy risks.
Despite the rising volatility (since 2017) of EM asset class, the correlations between BRICS constituents continue to diverge.
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