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Emerging Market Equity
Looking beyond the US market
Current market conditions create a misleading sense of safety in developed markets. Elevated valuations and heavy concentration in US mega-cap technology stocks mask underlying risks, and history suggests that starting from today’s valuation levels has typically led to only low single-digit returns over the following decade.In contrast, emerging markets are trading at significant discounts—nearly 60% cheaper than the US—with currencies that also appear undervalued. While the challenges in these markets are more visible, the starting valuations offer a more attractive risk-reward profile. Historically, similar entry points have delivered forward returns ranging from low single digits to more than 15% per annum.
When weighing the risks, avoiding emerging markets may in fact pose the greater long-term danger. Broader global exposure improves diversification and can reduce portfolio volatility. In addition, lower analyst coverage and market inefficiencies create opportunities for active managers to identify overlooked compounders and generate alpha. Join Stefan Sommerville, as he explains how Orbis has been uncovering opportunities in Emerging Markets for decades and where those opportunities are currently.