Emerging/Frontier

The Business Cycle’s Impact on Asset Performance

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Asset performance is highly sensitive to the global business cycle. In this chart book, we highlight the significant shifts in performance distributions across the global business cycle for major asset classes, including equity regions, styles, sectors as well as for fixed income, real asset and currencies. Ultimately, understanding the distributions of asset performance across business cycle stages and considering where the global economy is headed are key inputs in a rigorous investment decision-making framework.

Buying India’s Growth Story, But Not Today

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India has arguably the most compelling long-term growth opportunity in the global economy today. But should investors buy the hype surrounding Indian equities? We think India’s bright economic prospects have the potential to drive strong equity market returns in the long run; however, we do not think Indian equities offer a compelling overweight over a shorter-term, tactical horizon. Investors interested in India’s growth story from a strategic perspective should build allocations through high-quality public and private managers, preferably toward active managers on the public equity side.

Review of Market Performance: Calendar Year 2022

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Calendar year 2022 witnessed multi-decade record inflation and central banks responded with rapidly tightening monetary policy. Rising rates saw the correlation between bonds and equities turn positive, contributing to large declines across most asset classes. Funds flows diverted away from growth and momentum strategies, and yield curves flattened with the ten-year/two-year yield curve becoming inverted in most developed markets, signaling economic uncertainty ahead.

Will Brazil’s Presidential Election Undercut the Country’s Recent Strong Equity Performance?

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No, we don’t think so. While there may be higher-than-typical market volatility around the run-off election on October 30, we expect economic issues will be the primary driver of Brazilian equities in the months that follow. On balance, we see these issues as neither overly positive nor negative and recommend that investors maintain Brazilian allocations in line with their policy.

Emerging Markets Equities: It’s Not All About the Fed

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The Federal Reserve is poised to continue lifting interest rates this year. Many investors tend to view tightening Fed policy as a headwind for emerging markets (EM) equity performance and may be tempted to dial back exposure to the bloc, but market history is an inconsistent guide when gauging how EM equities will perform when the Fed raises rates. In this paper, we outline several reasons EM exposures could prove to be diversifying as the current cycle plays out.

Decades of Data: Emerging Markets 1987–2021

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The 2021 Emerging Markets edition of our annual report on the history of financial markets provides context for the range of returns investors can expect from equities, bonds, and cash; reveals the importance of various components of equity returns; examines the evidence for equity mean reversion; and reviews the relationship between initial valuations and subsequent returns for equities and bonds.

Decades of Data: Emerging Markets 1987–2020

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The 2020 Emerging Markets edition of our annual report on the history of financial markets provides context for the range of returns investors can expect from equities, bonds, and cash; reveals the importance of various components of equity returns; examines the evidence for equity mean reversion; and reviews the relationship between initial valuations and subsequent returns for equities and bonds. It also analyzes the historic economic declines and sharp asset price movements that resulted from the COVID-19 pandemic in 2020.

Emerging Markets Equity Manager Performance: 2020

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Slightly more than half of active emerging markets equity managers underperformed the MSCI Emerging Markets Index (gross of fees) in 2020—the fourth time the median manager has underperformed the benchmark out of the last five years. This chart book is our annual summary of the absolute and relative performance of managers that report to our database.