KBV is actively pivoting towards the emerging markets, point that was reiterated during the annual Global Emerging Market Meeting with the firm’s affiliates and managing partners.
Emerging market (EM) equities have offered significant return and diversification
potential over time, despite some extended periods of volatility.
•
The long-term positive attributes of emerging market countries remain intact,
and there is support for a reacceleration of GDP growth that could bring their growth
advantage versus developed markets back closer to historical levels.
•
The trend of a strengthening U.S. dollar—which has hurt EM equity returns during the past
few years—is unlikely to continue at its current pace. In fact, we believe that currency rates
could become a tailwind for EM investors.
•
EM equity valuations are attractive versus their developed market counterparts,
and the “knee-jerk” response to the U.S. presidential election has only helped maintain
this advantage after an otherwise strong 2016 for EM equities.
•
The case for EM equities as part of a diversified portfolio remains unchanged.
Given their attractive valuations and numerous signs of continued fundamental
improvement, we believe now is a particularly compelling entry point for investors
looking to increase or initiate allocations.

LOOKING AHEAD
At KBV, we believe the outlook for emerging market equities remains compelling. While short-term
global uncertainty is likely to persist; we see no fundamental changes to the attractiveness
of the asset class as a whole. As with any investment, there is, of course, the possibility
of market losses and volatility. However, we believe that EM equities are in the best position
in years to provide stronger returns than either U.S. or other developed market equities.

Press Release by:
Michelle Prevot
Media Chief Representative
Kleinwort Benson Ventures LP – Wealth Management