CPD: The investment potential in emerging market equities

Emerging markets (EM) are highly inefficient. Complicated governance structures, evolving macroeconomics and immature institutions result in elevated stock price volatility. This creates significant alpha generation opportunities, as well as challenges, for active investors in EM equity markets.

EM specialist Ashmore believes that companies with structural competitive advantages that deliver growth are best placed to benefit from EM secular growth drivers, as well as being well-positioned to navigate economic and market drawdowns.

Furthermore, opportunities to generate alpha are amplified by the fact that EM companies are often poorly researched, particularly in terms of their medium-term fundamentals. Consequently, businesses of enduring quality are often undervalued and trade at prices that fail to reflect their ability to sustain high returns over the long term.

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