Emerging market equities can provide to investors diversification beyond US-heavy global stock benchmarks as well as relatively attractive valuations compared with developed markets, while also offering exposure to dynamic businesses and economies.
Our view is that emerging markets are hard to ignore. The World Bank says emerging and developing economies represent around 45% of global GDP, compared with 25% in 2000.1 These countries have also accounted for approximately 60% of global economic growth over that period, with the three largest emerging markets - China, India and Brazil being significant drivers of this expansion.
Better tech valuations
The emerging market growth story is probably familiar to most investors, but one thing that interests us today is the breadth of potential opportunities. For example, it’s possible to invest in companies benefiting from the twin investment booms in AI and robotics at lower valuations than in developed markets including the US.
The MSCI EM Index currently trades on a forward price-to-earnings ratio of around 9.72 times, compared with 17.9 times for the MSCI World Index and 22.4 times for the Nasdaq.2
Forward price-to-earnings ratios MSCI Emerging Markets Index (blue) and MSCI World Index (orange) 2021-26
Some analysts have suggested that emerging markets could be seen as a “cheaper Nasdaq”, providing access to businesses such as Taiwan Semiconductor, a semiconductor manufacturer, and memory chip producers Samsung Electronics and SK Hynix.
These companies are important suppliers to the US-based AI hyperscalers (including Amazon, Google, Microsoft) that building AI capacity and operating vast cloud computing infrastructure. They are benefiting from the significant capital expenditures by the hyperscalers.
Information technology is the largest sector in the MSCI EM Index TSMC, Samsung Electronics and SK Hynix among its biggest constituents by market capitalisation.
Staying diversified
At Jupiter Origin, our approach is to always try to be well diversified relative to the index. We will discuss our approach in more detail later in this article.
The index offers more than just technology. Other major constituents of the benchmark include Tencent and Alibaba, which offer exposure to China’s shift towards a more consumer-led economy. We see good companies operating in the banking and industrial sectors.
MSCI Emerging Markets Index
Higher risk
To be sure, emerging markets are potentially associated with higher levels of political risk and lower levels of legal protection relative to developed markets. Emerging market equities can carry higher risks than developed market equities, including greater volatility, currency fluctuations, political instability and regulatory change. Historical examples include financial crises in Southeast Asia (1997), Brazil (1999) and Argentina (2001–02).
The World Bank report, while noting the robust growth in emerging markets over the last two decades, also highlights challenges such as rising debt burdens, demographic shifts and the costs related to climate change.
Performance has been cyclical. Emerging market equities underperformed in the late 1990s before rallying through to 2010, followed again by a period of underperformance versus the exceptionally strong US market. However, emerging markets have once again begun to outperform from this low base, marking the possible start of another strong relative performance cycle, in our view.
Our approach
We think active investment management is essential in emerging markets, where dispersion of returns across companies is very high. A carefully constructed portfolio of emerging market stocks can offer diversification benefits and help manage volatility. The Jupiter Origin emerging market portfolios typically hold 100-150 stocks.
Consistency of investment approach is absolutely key for us. We focus on identifying businesses that demonstrate:
- higher profitability and growth than the broader market
- the potential to sustain these advantages
- attractive relative value
- positive earnings and share price momentum
As a result, our portfolios tend to exhibit a blend of growth, value and momentum characteristics relative to the benchmark.
Our team’s investment approach is grounded in clarity, evidence and discipline. We avoid forecasts and subjective opinions, instead relying on objective data and collective judgment. We believe this helps reduce emotional bias and supports a repeatable, transparent investment process.
We are a small, experienced team with over 25 years of collaboration. This long-standing partnership fosters alignment, trust and efficient decision-making. We have applied this approach consistently since launching our emerging market equities strategy in 2011.
Footnotes
1World Bank policy research paper, From Tailwinds to Headwinds: Emerging and Developing Economies in the Twenty-First Century, as at 7.10.2025.
2MSCI data as at 30.09.26, Nasdaq data as at 20.10.26
La fuerza del pensamiento activo: juicios independientes
Un rasgo clave del enfoque de inversión de Jupiter es que evitamos adoptar una «visión de la compañía»; en lugar de eso, preferimos dejar que nuestros gestores formulen sus propios juicios sobre la clase de activos en la que invierten. Por ello, es preciso señalar que las opiniones expresadas, incluidas las referidas a cuestiones medioambientales, sociales y de gobierno corporativo, pertenecen al autor o autores y podrían diferir de las que mantienen otros profesionales de la inversión de Jupiter
Important information
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