Jan de Bruijn, Director, Emerging Market Equities, Robeco
The world is evolving, and our investment strategies must adapt. We believe that emerging economies offer more compelling investment opportunities than many developed countries. In 2025, some emerging markets (EM) have healthier economic fundamentals than developed peers and are home to companies with higher future earnings potential.
Technology is adopted faster in emerging markets
One key trend in emerging markets that has escaped many investors' attention is technology leapfrogging. In emerging markets a whole generation of technology is being quickly bypassed through superior and cheaper innovation, which has disrupted multiple industries. The telecommunications (straight to mobile) and renewable energy (in remote locations without grid infrastructure) industries are the most well-known examples. In finance it's having a particularly rapid impact with mobile telecommunications, enabling new payment networks. Meanwhile, access to basic banking services has become easier, and costs have fallen. This in turn has positive macroeconomic effects, bringing more of the population into the organized economy, reducing transaction costs, and potentially increasing the tax base, making this a powerful tailwind for emerging markets in general.
Trade is changing not slowing
Total global trade continues to expand but globalization is unraveling, and intra-regional trade agreements are becoming the norm. The US and China are reducing trade with each other, but compensating with new trading relationships in the rising economies in Asia-Pacific, Latin America, and Africa. This is allowing some countries to increase their share of the value chain in diverse sectors and industries.
Why now?
Investors will look back at the last decade and wonder whether they should consider renewed or increased exposure to EM. It's easy to understand why expectations of EM are anchored to the past. From 2001 to 2010, the MSCI Emerging Markets Index outperformed the MSCI World Index. Yet since 2011, EM equities have lagged developed markets, and many investors remain cautious. Our contention is that over a long-term time horizon that situation could flip especially as most emerging markets are trading at cheaper valuations than their historic averages.
Why Robeco in emerging markets?
From our Dutch roots, Robeco expanded into global investing in 1930, one year after the company was formed. Therefore, finding value on every continent has always been part of our DNA. In 1994 we launched our Emerging Markets Equities strategy to build on this heritage and apply our expertise in the era of globalization.
Combining fundamental investment with quant
We believe some investors overpay for perceived high quality growth in EM. Our fundamental stock selection analysis focuses on attractively valued companies with an underappreciated earnings outlook by the market.
We use a quantitative model as a tool to exploit the behavioural biases of market participants such as overconfidence and herd behaviour. We screen our investments with proprietary quantitative models which are designed to benefit from these inefficiencies by applying a long-term investment view to uncover structural drivers, and reveal patterns our portfolio managers may have missed.
Sustainability expertise
Sustainability is integrated in both the top-down country analysis and bottom-up stock selection. As emerging markets often feature poor transparency, lower governance standards, human rights issues, and lacking product safety standards, ESG analysis can identify non-financial risks and opportunities, allowing us to make better-informed investment decisions.
A solution for every investor
We have multiple EM strategies including our flagship Emerging Market Equities strategy which has returned an annualized 10.48% since January 2003 compared to 9.04% for its benchmark[i]. We also offer a high conviction Emerging Markets Stars Equities, Emerging Markets ex-China Equities, Emerging Markets Transition Equities, and strategies that invest in specific regions or countries.
A strong and experienced global team
The strategy is managed by dedicated emerging market specialists with specific country coverage. Our Emerging Markets team follows a consensus approach, whereby all of the members work together to determine investment decisions. Wim-Hein Pals, the head of the team, was a founding member of Robeco's emerging markets team in 1994, and has one of the longest tenures in the global emerging market equity asset class.
Embedded in Robeco's Global Fundamental Equities group of more than 70 investment professionals, the team cooperates closely with our China and Asia-Pacific specialists based in Hong Kong and Shanghai as well as sustainable investment specialists in Singapore and the Netherlands.
[i]Past performance is no guarantee of future results. The value of your investments may fluctuate
Source. Robeco, MSCI. Portfolio: Robeco Emerging Markets Equities strategy. Index: MSCI Emerging Markets Index. Index change per 01-01-2008 from S&P IFC Composite to MSCI Emerging Markets Index. All figures in EUR. Data end of February 2025. If the currency in which the past performance is displayed differs from the currency of the country in which you reside, then you should be aware that due to exchange rate fluctuations the performance shown may increase or decrease if converted into your local currency. Performance since inception is as of the first full month. Periods shorter than one year are not annualized. Returns gross of fees, based on gross asset value. Values and returns indicated here are before cost; the performance data does not take account of the commissions and costs incurred on the issue and redemption of units. These have a negative effect on the returns shown.
|
Annualized performance |
2024 |
10 Year |
Since January 2003* |
|
Robeco EM Equities strategy |
14.07% |
6.03% |
10.48% * |
|
MSCI EM Index |
14.68% |
4.28% |
9.04% |
|
Relative performance |
-0.61% |
1.75% |
1.44% |
* The strategy was launched in 1994, but comparison data for the strategy are only available since January 2003
Important information: This information is for professional investors only. Past performance is not a reliable indicator of future results. The value of investments and any income derived from them can go down as well as up, and investors may not get back the full amount invested. Active strategies, including the Robeco Emerging Markets Equities strategy, are subject to investment risks, including market fluctuations, and the potential for underperformance. While the strategy aims to generate excess returns, there is no guarantee that it will achieve its investment objective. The views expressed are for informational purposes only and do not constitute investment advice or an offer to buy or sell any financial instrument. Alpha refers to the excess return of an investment relative to a benchmark index and is a measure of performance.
