Market Outlook
Last Updated: 10 Feb 25 4 min read
1. What is an emerging market?
2. Why invest in emerging markets?
4. Emerging markets within PruFund
5. Outlook
Countries that are experiencing fast growth as they transition from low-income and underdeveloped economies to higher-income industrial and services led countries.
Did you know, 85% of the world population lives in an emerging market country? The term ‘emerging markets’ was first introduced in 1981 by economist Antoine van Agtmael to reframe investor perceptions of previous labelled ‘third world’ countries.
Today, many countries categorised as emerging markets have already transitioned to becoming industry and service led. This makes terms such as ‘growth markets’ or ‘frontier markets’ better suited to reflect the innovation, adaptability and resilience of their economies.
One of the main benefits of investing in emerging markets is the expectation of higher investment returns compared to developed economies. This is due to their higher economic growth, driven by favourable demographics (younger, growing populations), improving governance (growing stability, transparency and effectiveness of organisations) and global competitiveness.
Alongside fast growth comes increased risks to investors due to factors such as regulatory quality, inflation and political stability.
PruFund Growth is overweight on emerging markets compared to the global equities benchmark MSCI AC World, it is also more geographically diversified.
Source: M&G Treasury & Investment Office – as at November 2024
Source: M&G Treasury & Investment Office – as at September 2024
We continue to see value in pursuing portfolios that are well diversified across different asset classes and regions, with positive exposure to emerging markets and the growth opportunities that they bring.
We are also mindful of the risks posed from the different regions and continually monitor closely what is happening in economies globally. As a team we always look to evolve portfolios and add or increase exposures that offer different return profiles, in order to provide the best possible outcomes for clients.
Please note that the value of an investment can go down as well up and your client may get back less than they have originally invested.