Robeco, The Investments Engineers

Opportunity: Emerging markets

The new emerging markets epoch

Macro fundamentals in emerging markets have been transformed in the past two decades with leading global companies to choose from, and rapidly developing sectoral and regional themes reshaping the global investment landscape.


Why emerging markets?

Companies in leading emerging markets are becoming regional and global leaders in key industries undergoing rapid technological change, including semiconductors, batteries, renewable energy and fintech.

In pure economic terms, emerging markets are well placed to take the lead in the next global equity upcycle. Low core inflation, an advantageous demographic structure underpinning steady growth in consumption and wealth accumulation, growing foreign exchange reserves, and trade surpluses. Prudent fiscal policies characterize our favored emerging economies in Central Europe, Latin America and Asia, and these positive attributes are reflected in borrowing costs and volatility that have converged with developed markets.

We believe this set-up is unique in the turbulent history of emerging markets investing and represents an opportunity to rebalance your portfolio as the Earth’s economic axis tilts once more.

Jaap van der Hart - Portfolio Manager

Jaap van der Hart
Portfolio Manager

“

Companies in leading emerging markets are starting to surface as global leaders

Why now?

Investors remain underweight many of the world’s most innovative economies and as a result they are missing direct exposure to some of the best growth companies for long-term investors.

From a macroeconomic perspective, the advantages developed markets have enjoyed in the past decade have evaporated with the fight against inflation. Quantitative easing has stopped or is disappearing, real rates are normalizing, and emerging market fundamentals are superior.

Volatility, which has traditionally been a weakness of emerging markets, is now the same as developed markets while valuation metrics show emerging markets trading at a historic discount.

Compelling spreads

Compelling spreads

The left-hand chart shows the valuation spread of the MSCI World Index vs. the MSCI Emerging Market Index. The valuation spread is based on four bottom-up-calculated multiples (price-to-book, price-to-earnings, price-to-cashflow, and price-to-dividend). For each multiple the valuation ratio of the MSCI Emerging Markets Index is divided by the same valuation ratio for the MSCI World Index. The right-hand chart shows the five-year rolling standard deviation in MSCI Emerging Market Index and the MSCI World Index. Source: Robeco, MSCI, August 2023.

Why Robeco?

Robeco’s emerging markets team has unrivaled experience with stable investment teams since the foundation of fundamental emerging market investing in 1994 and quantitative emerging market investing in 2006. This consistency and long track record also mean we leverage a rich source of country, sector and stock data. Bolstered with renowned sustainability and next generation quant expertise, Robeco can find the best opportunities in the vast emerging market investment universe.

Research driven

Research driven

Our multi-decade track record in emerging markets investing has been built on the foundations of proprietary, award-winning research. We find an edge at region, country or sector level, and rely on our research analysts and sustainability experts to find the best opportunities.

Value tilt

Value tilt

Emerging markets are the most fertile pastures for value hunters and we manage our strategies with a value tilt. Turnaround plays and companies with embedded competitive advantage that isn’t yet priced-in by domestic or international investors can be found with rigorous research and local knowledge.

Quant

Quant

Quantitative solutions exploit deeply entrenched cognitive biases that afflict investors. Our disciplined, transparent and systematic approach keeps emotions at bay and takes advantage of market inefficiencies driven by human behavior. This is how we deliver superior risk-adjusted performance for our clients in the long run. In addition, our quant strategies allow for extensive customization along various risk, return and sustainability dimensions.

Sustainability

Sustainability

Robeco has long been a leader in SI, taking sustainability into consideration since 2001 and integrating ESG factors since 2011. Assessing existing and potential ESG risks and opportunities helps us make better-informed investment decisions.

Let's keep the conversation going

Keep track of fast-moving events in sustainable and quantitative investing, trends and credits with our newsletters.

Don’t miss out
Robeco

Robeco aims to enable its clients to achieve their financial and sustainability goals by providing superior investment returns and solutions.

Important information
The Robeco Capital Growth Funds have not been registered under the United States Investment Company Act of 1940, as amended, nor or the United States Securities Act of 1933, as amended. None of the shares may be offered or sold, directly or indirectly in the United States or to any U.S. Person (within the meaning of Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”)). Furthermore, Robeco Institutional Asset Management B.V. (Robeco) does not provide investment advisory services, or hold itself out as providing investment advisory services, in the United States or to any U.S. Person (within the meaning of Regulation S promulgated under the Securities Act).
This website is intended for use only by non-U.S. Persons outside of the United States (within the meaning of Regulation S promulgated under the Securities Act who are professional investors, or professional fiduciaries representing such non-U.S. Person investors. By clicking “I Agree” on our website disclaimer and accessing the information on this website, including any subdomain thereof, you are certifying and agreeing to the following: (i) you have read, understood and agree to this disclaimer, (ii) you have informed yourself of any applicable legal restrictions and represent that by accessing the information contained on this website, you are not in violation of, and will not be causing Robeco or any of its affiliated entities or issuers to violate, any applicable laws and, as a result, you are legally authorized to access such information on behalf of yourself and any underlying investment advisory client, (iii) you understand and acknowledge that certain information presented herein relates to securities that have not been registered under the Securities Act, and may be offered or sold only outside the United States and only to, or for the account or benefit of, non-U.S. Persons (within the meaning of Regulation S under the Securities Act), (iv) you are, or are a discretionary investment adviser representing, a non-U.S. Person (within the meaning of Regulation S under the Securities Act) located outside of the United States and (v) you are, or are a discretionary investment adviser representing, a professional non-retail investor.


Access to this website has been limited so that it shall not constitute directed selling efforts (as defined in Regulation S under the Securities Act) in the United States and so that it shall not be deemed to constitute Robeco holding itself out generally to the public in the U.S. as an investment adviser. Nothing contained herein constitutes an offer to sell securities or solicitation of an offer to purchase any securities in any jurisdiction. We reserve the right to deny access to any visitor, including, but not limited to, those visitors with IP addresses residing in the United States. This website has been carefully prepared by Robeco. The information contained in this publication is based upon sources of information believed to be reliable. Robeco is not answerable for the accuracy or completeness of the facts, opinions, expectations and results referred to therein. Whilst every care has been taken in the preparation of this website, we do not accept any responsibility for damage of any kind resulting from incorrect or incomplete information. This website is subject to change without notice. The value of the investments may fluctuate. Past performance is no guarantee of future results. If the currency in which the past performance is displayed differs from the currency of the country in which you reside, then you should be aware that due to exchange rate fluctuations the performance shown may increase or decrease if converted into your local currency. For investment professional use only. Not for use by the general public.