Why are emerging markets less risky today?
Lower debt, reduced volatility, and world-leading companies are challenging long-held assumptions. It could be time for a reality check.
From short-term surge to long-term leadership
The recent rally in emerging markets (EM) is more than a rebound – it’s a signal of deeper change. Momentum may be the trigger, but fundamentals are the foundation. For investors willing to look beyond the next quarter, EMs offer exposure to the structural growth drivers of the future.
The new global growth engine
Emerging markets already generate 65% of global output – and the IMF expects that to rise to nearly 75% over the next few years.(1) These economies aren’t just catching up; they’re leading in industries that will define the next cycle: clean energy, digital infrastructure, and AI.
Demographics and demand are on their side
Young populations, expanding middle classes, and rapid urbanisation are fuelling sustained domestic demand. Unlike developed markets, much of EM growth is internally driven – making it more resilient and diverse.
Quality is rising – and risk perceptions are outdated
Governance, transparency, and financial strength have improved dramatically. Many EM companies now operate with world-class standards and lower debt than their developed market peers. The old perception of volatility is giving way to a new reality of confidence and consistency.
A long-term opportunity – still at a discount
Despite their scale and potential, EM equities remain undervalued and underowned. For long-term investors, today’s valuations offer a rare entry point into the growth markets of tomorrow – at prices that may not last.
TEMIT: Accessing EM growth with conviction
The Templeton Emerging Markets Investment Trust (TEMIT) offers a powerful way to access this opportunity. With over £2 billion in assets and a portfolio of 60–80 high-quality EM companies, TEMIT combines deep research, disciplined stock selection, and long-term conviction. And because its share price trades below the value of its underlying assets, investors can access EM growth at an even lower price – a compelling opportunity for those seeking long-term exposure to emerging markets.
EMs are not just back – they’re leading
The short-term rally may have opened the door – but it’s the long-term case for emerging markets that makes it worth stepping through. For investors seeking structural growth, diversification, and value, EMs are not just back – they’re leading.
Newsletter Subscription
Subscribe to receive emails containing portfolio manager commentary, factsheets, market insights and other relevant information straight to your inbox.
