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Disclosure – Non-substantive Research
This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. With this commentary, Kepler Partners LLP does not intend to influence your investment firm's behaviour.
In the past five years, particularly since the onset of the coronavirus pandemic, dramatic geopolitical and economic developments have led to observed decouplings between markets. As we discuss below, data shows this is especially true within the emerging market sector. This shift is illustrated by widening correlations among many of these markets, with one prime example being China, where factors like the pandemic, geopolitical tensions, and a property crisis have prompted investors to seek out alternatives. As a result, a sector that had been growing more correlated to developed markets is now offering investors more uncorrelated options than it has in years – and many different strategies that are uncorrelated to one another. In our view, this presents a compelling opportunity for diversification, especially within emerging markets, even in an increasingly interconnected world.
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