Battered Emerging Markets Are Creating Value Opportunities

Global inflation and a strong dollar may have been turning investors away from emerging markets (EM), but bargain hunters might be inclined to find value amongst these battered assets.

Investors looking to tail the plays of asset managers might also find that EM present an opportunity. For instance, Franklin Templeton is finding value in EM-related assets.

“Emerging markets were down in the first half of 2022 as inflation and geopolitical tensions besieged global economies,” an Institutional Investor article noted. “But Franklin Templeton, the $1.5 trillion asset manager, says there are still plenty of reasons to remain positive.”

EM is typically tied to the strength of the local currency, and given that the dollar has been rising amid tightening monetary policy by the Federal Reserve, it’s easy to see where the weakness can occur in EM. Despite this, EM currency has actually been more stable in the present time than it has in previous years.

“To begin with, emerging markets have demonstrated far greater resilience to macroeconomic shocks than in the past,” the article added. “Investors can see this reflected in the recent low volatility of EM currencies, according to Manraj Sekhon, chief investment officer of emerging markets equity at Franklin Templeton.”

An All-Inclusive EM ETF Focused on Growth

While EM can encompass nations like China and Brazil, investors seeking more growth beyond those economic powerhouses can look to frontier markets. These markets can provide further growth-fueled opportunities, particularly for the long-term investor.

One such all-inclusive frontier markets fund to consider is the Global X Next Emerging & Frontier ETF (EMFM).

EMFM offers investors:

  • High growth potential: EMFM seeks to improve upon traditional EM funds by excluding the slower-growing, developed EMs of Brazil, Russia, India, China, South Korea, and Taiwan, while including higher growth potential frontier markets.
  • Broad geographic exposure: In a single trade, EMFM offers access to 200+ securities from more than two dozen emerging and frontier market countries.
  • Multi-sector approach: In addition to balancing geographic exposure, EMFM tracks an index that caps sector concentration at 30%, ensuring that stocks are selected from a range of industries.

For more news, information, and strategy, visit the Thematic Investing Channel.

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