Is Now the Time for Value Investing in Emerging Markets?

By Al Polit, CFA, Jonathan Veiga, CFA and Bert Whitson - January 2019

Key Takeaways

  • Tightening U.S. monetary policy, heightened geopolitical tensions, U.S.-China trade tensions, and country-specific events in select emerging markets (EM) have triggered contagion fears.
  • We believe valuations are attractive, with EM trading near 15-year lows on a price-to-book basis.
  • Our research shows EM currencies have a high likelihood of augmenting local EM equity returns for U.S. dollar investors.
  • Despite the doom and gloom, we believe compelling EM opportunities remain, especially in the value category.
  • Deep value has historically delivered strong absolute and risk-adjusted returns in EM.

EM equities faced many challenges in 2018, including tightening U.S. monetary policy, the U.S.-China trade conflict, geopolitical tensions, and financial crises in Argentina and Turkey. After a tough year, EM may be undervalued in both absolute terms and relative to developed markets. In our view, fundamentally focused, long-term investors have an opportunity to take advantage of irrational market behavior during periods of such undervaluation.

Al Polit, CFA
Senior Portfolio Manager
Jonathan Veiga, CFA
Jonathan Veiga, CFA
Portfolio Manager
Bert Whitson
Bert Whitson
Portfolio Manager

Is Now the Time for Value Investing in Emerging Markets?

January 2019 | Market Perspective

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    Is Now the Time for Value Investing in Emerging Markets?

    Despite the fears gripping emerging markets, we see attractive opportunities for long-term investors.

      Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

      The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

      This information is for educational purposes only and is not intended as a personalized recommendation or fiduciary advice. There are different options available for your retirement plan investments. You should consider all options before making a decision. Our representatives can help you evaluate all of your distribution options.

      Data assumes reinvestment of dividends and capital gains. The value of your investments can fluctuate. Past performance does not guarantee future results.

      Diversification does not assure a profit nor does it protect against loss of principal.

      International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks.

      References to specific securities are for illustrative purposes only, and are not intended as recommendations to purchase or sell securities. Opinions and estimates offered constitute our judgment and, along with other portfolio data, are subject to change without notice.