Emerging markets (EM) offer investors access to some of the world’s most dynamic, and increasingly important, economies and companies. With robust economic growth, improving fundamentals and a supportive demographic tailwind, we believe their future is full of potential.
These trends can create compelling opportunities across both emerging market equities - where companies can harness long-term growth drivers - and emerging market debt, which is benefiting from improved credit quality, stronger policy frameworks and attractive yield potential. Together, they provide diversified sources of return beyond traditional markets that can be valuable for investors' portfolios.
By staying active and thinking long-term, we seek to uncover tomorrow’s winners today. With discipline and insight, we navigate this vast and evolving universe to find the opportunities shaping the next investment chapter.
Why emerging markets now?
Dynamic
EM have come to the fore at a time of massive societal and economic change. Their relative economic youth and adaptability have allowed them to leapfrog developed markets (DM) to become leaders in areas such as technology and energy transition. Investing in EM allows investors to tap into a dynamic market which is leading the charge in the industries of the future.
Diversification
The EM investment universe spans over 80 distinct countries, with varied growth engines and economic drivers. As well as providing valuable portfolio diversification, investing in EM provides exposure to exciting businesses and economies growing in prominence, supported by trends such as urbanisation, demographics and rapid technological advancements.
Disciplined
EM economies have come to be characterised by fiscal and monetary discipline, in a reversal of roles with DM. This is also reflected in the corporate universe, where EM companies enjoy strong credit quality and better governance standards. Discipline applies to our approach too; it takes rigour and selectivity to choose the winners of tomorrow.
Emerging market equities
From fast-growing economies to innovative companies reshaping global industries, emerging markets offer a breadth of opportunity — alongside meaningful complexity. The M&G Global Emerging Markets Fund is built on a disciplined, bottom-up approach focused on identifying companies with stable and strong or low and improving returns on capital.
The fund aims to deliver consistent outperformance by investing across four distinct stock categories, each selected for its potential to generate alpha across different market cycles. With high active share and proprietary research, the strategy reflects a differentiated, long-term commitment to shareholder alignment and valuation discipline.
To help investors cut through the noise, Michael Bourke, Head of Emerging Market Equities, breaks down both how we invest and why the asset class presents compelling prospects over the long term.
Why should investors be excited by emerging market equities today?
How does our approach identify opportunity in emerging markets?
Emerging market debt
Emerging market debt (EMD) has historically been viewed as a tactical allocation, but structural improvements in policy credibility, fiscal discipline, and market depth now position it as a core component of a diversified portfolio. We think EMD is attractive for investors looking for a stable allocation to an asset class that is supported by strong growth, increasing credibility, and diversification.
The M&G Emerging Markets Bond Fund is a flexible, ‘best-ideas’ fund that invests across all emerging market debt securities – be they sovereign, corporate, high quality, or high-yield – denominated in hard currency and any emerging market (EM) currency. It is our conviction that this investment universe offers one of the best opportunities to create a genuinely diverse portfolio across countries, sectors, regions, and currencies.
M&G Global Emerging Markets Fund investment policy:
The fund aims to provide a combination of capital growth and income, net of the Ongoing Charge Figure, that is higher than that of the MSCI Emerging Markets Index over any five-year period. At least 80% of the fund is directly invested in the shares of companies that are based, or do most of their business, in emerging markets.
M&G Emerging Markets Bond Fund investment policy:
The fund aims to provide a combination of capital growth and income, net of the Ongoing Charge Figure, higher than that of a composite index (1/3 JPM EMBI Global Diversified Index, 1/3 JPM CEMBI Broad Diversified Index and 1/3 JPM GBI-EM Global Diversified Index) over any five-year period. At least 80% of the fund is invested in bonds issued by governments and companies in emerging markets. These bonds can be denominated in any currency, including emerging market currencies. Investments are selected based on in-depth analysis of individual bond issuers, combined with an assessment of global, regional, and country-specific macroeconomic factors.
The main risks associated with the funds:
- The value and income from the funds’ assets will go down as well as up. This will cause the value of your investment to fall as well as rise. There is no guarantee that the funds will achieve its objective and you may get back less than you originally invested.
- Investing in emerging markets involves a greater risk of loss as there may be difficulties in buying, selling, safekeeping or valuing investments in such countries.
- The funds can be exposed to different currencies. Movements in currency exchange rates may adversely affect the value of your investment.
- Investments in bonds are affected by interest rates, inflation and credit ratings. It is possible that bond issuers will not pay interest or return the capital. All of these events can reduce the value of bonds held by the M&G Emerging Markets Bond Fund.
- The M&G Emerging Markets Bond Fund may use derivatives to profit from an expected rise or fall in the value of an asset. Should the asset’s value vary in an unexpected way, the fund will incur a loss. The fund’s use of derivatives may be extensive and exceed the value of its assets (leverage). This has the effect of magnifying the size of losses and gains, resulting in greater fluctuations in the value of the fund.
- Further risk factors that apply to the funds can be found in the funds’ Prospectus
It is also important to note that:
- The M&G Global Emerging Markets Fund invests mainly in company shares and is therefore likely to experience larger price fluctuations than funds that invest in bonds and/or cash.
- The M&G Emerging Markets Bond Fund allows for the extensive use of derivatives
The team
Our Emerging Markets capability is supported by a highly experienced team spanning London, Singapore, Hong Kong, Mumbai, and Cape Town. This diverse group combines deep sector knowledge across financials, technology, healthcare, and infrastructure with regional insights into Asia, Latin America, and the Middle East. Together, they deliver rigorous research and disciplined portfolio construction, ensuring a robust foundation for long-term investment success.
Michael Bourke
Head of Emerging Markets Equities
Charles de Quinsonas
Head of Emerging Markets Debt
The views expressed on this page should not be taken as a recommendation, advice or forecast, nor as a recommendation to purchase or sell any particular security.
The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested. Past performance is not a guide to future performance.
