
Emerging markets equity India’s economic growth: Standing out globally
India is one of the strongest growing economies in Asia, driven by digital transformation, robust consumption and expanding exports. Find out more.
An active fund of around 40 companies in emerging markets outside China derived through bottom-up analysis, and with a tight focus on valuation.
Many investors now have dedicated equity exposure to China. A growing number of them have expressed a desire to treat China separately when allocating to emerging market equities. This isn’t out of the ordinary: large individual markets are often removed from regional equities as they grow.1
By investing in an emerging market ex China fund, investors can achieve greater country and sector diversification, while reducing the specific political, regulatory and geostrategic risks associated with investing in China.
Due to its rapid economic growth and substantial market size, China has come to dominate the emerging markets universe today. But beyond the shadow of China lies a diverse opportunity set: each country comes with its own idiosyncrasies and inefficiencies, providing fertile ground for active stock pickers like us.
We seek to buy companies for less than they are worth and spend most of our time evaluating their ‘fair value’. Our valuation-led approach incorporates rigorous fundamental analysis, meaning we can identify the likely sources of mispricing and how our views differ from consensus.
We tend to initiate positions in stocks temporarily out of favour, which increases the potential rewards without relying on undue optimism. We target a double-digit annualised return from each stock we buy2, as we ride the transition from contrarian to popular.
We favour net cash balance sheets as a form of insurance, should the investment case not play out as anticipated. Access the Invesco Emerging Markets ex China Fund (UK) product page to view KIIDs and factsheets.
India is one of the strongest growing economies in Asia, driven by digital transformation, robust consumption and expanding exports. Find out more.
Our Henley-based Asian & EM Equities Team discuss the opportunities of emerging markets and why a shift in perspective is required.
The Indian equity market is poised for significant growth, and we believe performance will be supported by strong corporate earnings and GDP figures. Find out more.
Charles Bond, fund managerEmerging market equities offer a substantial opportunity set for active investors – with or without China.
The team has been successfully investing in Asian and emerging market equities for over 20 years. Today, the team’s Asian equity strategies have a combined AuM of > EUR 12 billion.
Chinese equities have taken an ever-greater slice of the emerging markets pie over the years. While only around 5% of the MSCI Emerging Markets index consisted of Chinese equities 20 years ago, they make up around 30% of the index as at December 2023.
China’s growing dominance in widely followed emerging market benchmarks has caused investors to worry about concentration risks. Combined with investors becoming more wary of China-specific risks, this has fuelled demand for products that can limit their exposure to the world’s second biggest economy.
Many emerging markets benefit from the same positive demographics that have made China a compelling case, such as a rising middle class and a younger population. Over the past 20 years, emerging market returns have been similar – with or without China.
You can invest in the Asian and emerging market stock markets by investing in actively managed mutual funds or exchange traded funds (ETFs). Invesco offers a broad range of actively managed funds and ETFs.