Despite the possible headwinds of increasing interest rates and potential appreciation of the U.S. dollar, the EM story remains compelling for many investors.
The contribution of EM countries to global GDP growth is material, and market valuations are relatively attractive.
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One thing that hasn’t changed during Dr Mobius’s career, despite our increasing affection for EM and the structural changes, is the region’s volatility premium over other shares.
The average of the five-year volatility in EM equities since 1987 (rolling quarterly in USD) is 46 per cent higher than that of US equities and 32 per cent higher than that of global equities (ex-US).
Jake Moeller is head of UK and Ireland research for Lipper
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