Paul Korngiebel, CFA, Emerging Markets Portfolio Manager, discusses how recent U.S. political changes may impact emerging markets in this short clip. Read the highlights below.
Catalysts in Play: Volatility may be diminishing in the U.S., but that’s not the case in the emerging markets, where increased volatility is leading to dislocation — and opportunities — in companies across all cap sizes right now.
Entry Points: While Boston Partners deploys a bottom-up, value-oriented approach to portfolio construction, several factors are influencing where an actively managed, value-oriented strategy can identify attractive mispricing opportunities.
- Globalization 1.5: The relationship between the U.S. and China deteriorated over the last four years. However, the potential for a less-contentious relationship would support a recovery marked by a steady global-growth profile and a healthier geopolitical climate for multinational companies and investors.
- Accommodative Rates: The low-rate environment in the U.S., based on early indications from the Fed, is expected to hold for at least the next 24 months. This typically translates into a “risk on” trade across emerging markets as currencies, fixed income and equities generally enjoy resulting tailwinds.
- Return of Value: Just as the developed markets saw value come back into fashion late last year, emerging market stocks too experienced a value rebound in the fourth quarter, which is typical during the early stages of a recovery.
Three Circles Lens: Given these new variables, this is precisely the type of market where fundamental analysis directed towards identifying both value generating and value destructive businesses can create meaningful sources of alpha for active management in the most inefficient capital markets in the world.
Active Strategy: Boston Partners’ Emerging Markets Dynamic Equity strategy, launched in 2015, is an all-cap, low-beta approach that employs additional alpha sources designed to capture the returns of the MSCI EM Index with reduced risk and volatility. Our experienced team pursues an analytical advantage through the marriage of fundamental, quantitative, and risk analysis
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