Emerging markets are on the rise, with all 24 projected to grow in 2025 according to the International Monetary Fund (IMF).
The financial press has been in full voice about the so-called “Sell America” trade and a great rotation into emerging markets. UK investors, it seems, are starting to buy into the idea too.
Which equity markets will outperform in 2026?
A total of 21,704 UK investors voted in a Templeton Emerging Markets Investment Trust (TEMIT) poll asking which equity markets they expect to outperform in 2026. Emerging markets topped the list with 32% of the vote, just ahead of US equities at 30%. UK equities placed third, attracting 25%.
A close result points to shifting sentiment
The close result suggests a clear, but gradual, change in sentiment. Emerging markets outperformed developed markets in 2025, and that experience is prompting some investors to reassess long-held assumptions – not rushing out of the US, but increasingly questioning whether US equities will continue to dominate returns in the same way.
Why confidence in US equities is being questioned
Part of the backdrop is growing caution around US markets. After a strong run, some investors argue valuations look increasingly stretched, with palpable anxiety about a potential AI-led tech bubble.
Add dollar weakness, political uncertainty and the risk of tariff tantrums – sudden policy shifts that can jolt supply chains and sentiment – and it’s not hard to see why some investors are looking for balance beyond Wall Street.
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What’s driving investors towards emerging markets?
Investors, meanwhile, are turning towards emerging markets, pointing to a familiar set of long-term structural advantages. Many emerging economies sit at the heart of global growth engines, from parts of the technology supply chain, including semiconductor production, to raw materials and fast-growing domestic demand.
Emerging markets have also historically tended to benefit from periods of US dollar weakness. For investors thinking about diversification and future sources of growth, that combination is helping to bring the asset class into sharp focus.
Another point we previously highlighted is that while emerging markets account for roughly 40% of the global economy, they form just 10% in global equity indices such as the MSCI ACWI. Critics argue this means investors who believe they are diversified through “global” funds can end up heavily skewed towards developed markets, and a small number of large US companies, all in the technology sector.
Fund managers even more positive on emerging markets
Professional investors appear to hold a stronger view. Emerging markets were “tipped for the top in 2026” by UK fund managers in the Association of Investment Companies’ annual survey. With 28% of responses, emerging markets finished well ahead of the UK (19%) in second place and the US further behind.
What does this mean for UK investors in 2026?
Investors are increasingly recognising the long-term attractions of emerging markets, but the close result suggests conviction remains measured. The message from the poll is not about abandoning the US, but about broadening portfolios and avoiding over-reliance on any single market.
For some investors, the growth potential of emerging markets remains compelling – yet exposure may still be limited or overlooked altogether. It could be worth taking a fresh look at your portfolio to see whether it reflects the opportunities shaping the global economy – and whether your future really is emerging!
Source: TEMIT investor poll (21,000+ votes).
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