Executive Summary

 

Eastspring Investment's Global Emerging Markets (GEM) ex-China Dynamic Strategy achieved its 3-year anniversary on 31 May 2024. Find out more.

The Strategy was launched in response to growing demand for solutions seeking alpha across EM excluding China. While EM ex-China product launches have increased markedly over the past 3 years, only 32 dedicated strategies comprise the eVestment universe as of December 2023, with total AuM of USD12 billion. Excluding passive and those with <3 Year track records, only 13 remain with USD8.9 billion under management.

Asset owners and their consultants/advisors continue to assess EM exposures while debating how best, or if at all, to allocate to China within EM allocations. While there’s no single approach, allocators need to carefully analyze the universe of managers as differences exist.

Differentiating Eastspring’s GEM ex-China Dynamic Strategy:

  • All-Cap, High Conviction, Relative and Absolute Value, Contrarian
  • Active stock selection drives alpha
  • Low/negatively correlated with GEM peers
  • Competitive returns and alpha generation

The GEM ex-China investment universe presents a robust and diverse opportunity set for bottom-up stock picking and more meaningful exposure to:

  • Smaller, developing markets such as Indonesia, Philippines, Mexico, Chile, and South Africa, which have been marginalized in the EM benchmark by China’s dominance.
  • Markets and companies benefiting from secular trends including the global infrastructure investment cycle, decarbonization initiatives, global supply chain transitions, and technological innovation.
  • Attractive valuations for lesser-owned, mispriced stocks.

Constructing a differentiated, uncorrelated portfolio through a research intensive, contrarian investment approach.

  • We believe that focusing on a broader universe of names across the full market cap spectrum can yield attractive opportunities which are often under-researched and overlooked.
  • Bottom-up stock selection drives country and sector positioning and is a key source of alpha generation.
  • Emphasis on both relative and absolute valuation empowers the team to find “value” in all market environments across sectors, countries and market caps.

Find out more about our GEM ex-China strategy.

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Sources:
1 MSCI Emerging Markets Index, 30 Apr 2024

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