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# Institutional Investments
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Global Emerging Markets Equities

A positive long-term outlook

 

Good long term fundamentals. Emerging Markets represent four-fifths of the world’s population, three-quarters of its land-mass, two-thirds of its foreign exchange reserves and close to half of global output when adjusted for exchange rates (PPP) Footnote Purchasing Power Parity, yet they account for only 13% of world equity by market capitalization.1 It’s clear that the potential for growth is exceptional over the medium to long-term. Emerging market equities rose by almost 80% in 2009, and valuations are now less attractive than they were at the beginning of 2009. Stock selection is critical in this environment.2

An increasing number of well-managed companies. Companies in Emerging Markets have become better managed and more transparent in order to compete for the increased investor cash flow into the region. Companies now have stronger balance sheets, are more profitable and increasingly committed to maximizing shareholder value.

Diversification benefits to your portfolios. While the argument that Emerging Markets have decoupled from developed markets has been debunked, they do have a demonstrably important role to play in portfolio diversification.

  • 1 Source: BofA Merrill Lynch Global Equity Strategy, BP, CIA World Factbook, IMF World Economic Outlook, MSCI, February 26, 2010.
  • 2 Source: Lipper, MSCI Emerging Markets Index. Total return, USD, 12/31/2008 - 12/31/2009