Diversified exposure to emerging markets, capturing value and growth

The Emerging Markets strategy invests primarily in common stocks of emerging markets companies. The strategy combines value and growth, and bottom-up and top-down factors. Our quantitative stock selection process is focused on attractively valued companies with superior earnings prospects and positive market sentiment; these companies should produce consistent returns across investment cycles. We use the same approach to select sectors and countries, comparing valuation against earnings growth and market sentiment. At the country level, we also consider the health of the macro-economy. Our quantitative process seeks to combine these factors while attempting to avoid undue sources of risk, which for this strategy we define as tracking error (a measurement of dispersion from a benchmark index).

Benchmark
MSCI Emerging Markets in USD
Inception
March 29, 2007
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Strategy overview

The portfolio managers discuss our Emerging Markets Equity strategy.

Portfolio managers

Quantitative Portfolio Manager
Head of Quantitative Research
Quantitative Portfolio Manager
Quantitative Portfolio Manager
Quantitative Portfolio Manager

Performance

Table Header QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 0.7%1.5%7.0%7.9%9.2%4.2%5.2%
Strategy (net) 0.6%1.3%6.0%7.0%8.2%3.3%4.2%
MSCI Emerging Markets 1.3%4.4%9.6%4.3%6.8%3.5%3.6%
Table Header QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 0.7%1.5%7.0%7.9%9.2%4.2%5.2%
Strategy (net) 0.6%1.3%6.0%7.0%8.2%3.3%4.2%
MSCI Emerging Markets 1.3%4.4%9.6%4.3%6.8%3.5%3.6%
Table Header QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 0.8%0.8%8.8%5.8%10.8%5.0%5.2%
Strategy (net) 0.6%0.6%7.9%4.9%9.9%4.0%4.2%
MSCI Emerging Markets 3.0%3.0%8.6%1.9%8.4%4.1%3.5%
Table Header QTD YTD 1 year3 years5 years10 years Since inception
Strategy (gross) 0.8%0.8%8.8%5.8%10.8%5.0%5.2%
Strategy (net) 0.6%0.6%7.9%4.9%9.9%4.0%4.2%
MSCI Emerging Markets 3.0%3.0%8.6%1.9%8.4%4.1%3.5%
Fund 20242023202220212020201920182017201620152014201320122011201020092008
Strategy (gross) 16.8%19.1%-21.8%-0.3%18.1%18.1%-16.8%41.1%10.5%-15.1%3.4%-1.3%27.5%-17.0%28.0%90.5%-57.8%
Strategy (net) 15.8%18.1%-22.5%-1.2%17.1%17.1%-17.5%39.8%9.4%-16.0%2.4%-2.3%26.2%-17.9%26.7%88.7%-58.2%
MSCI Emerging Markets 8.1%10.3%-19.7%-2.2%18.7%18.9%-14.2%37.8%11.6%-14.6%-1.8%-2.3%18.6%-18.2%19.2%79.0%-53.2%
Table Header
Strategy (gross)
Strategy (net)
MSCI Emerging Markets
20242023202220212020201920182017201620152014201320122011201020092008
16.8%19.1%-21.8%-0.3%18.1%18.1%-16.8%41.1%10.5%-15.1%3.4%-1.3%27.5%-17.0%28.0%90.5%-57.8%
15.8%18.1%-22.5%-1.2%17.1%17.1%-17.5%39.8%9.4%-16.0%2.4%-2.3%26.2%-17.9%26.7%88.7%-58.2%
8.1%10.3%-19.7%-2.2%18.7%18.9%-14.2%37.8%11.6%-14.6%-1.8%-2.3%18.6%-18.2%19.2%79.0%-53.2%

Portfolio (as of April 30, 2025)

Benchmark: MSCI Emerging Markets
Asset Allocation
Table Header Strategy
Stocks 98.5%
Cash 1.5%
Strategy Characteristics
Table Header Strategy Benchmark
No. of holdings 188 1206
Weighted avg. market cap (US $MM) $120,380 $115,142
NTM price/earnings 8.7 11.9
Price/book value 1.3 1.8
Dividend yield (%) 3.1 2.6
NTM EPS revision (wtd. avg) 3.1 -7.3
TOP 10 HOLDINGS
Security Country Active weight*
China Construction Bank Corp. China 1.9%
Tencent Holdings Ltd. China 1.6%
REC Ltd. India 1.5%
Bharti Airtel Ltd. India 1.5%
Ping An China 1.0%
JBS SA Brazil 1.0%
Cosco Shipping Holdings Co China 0.9%
Pop Mart International Group Ltd. China 0.9%
Sea Ltd. Singapore 0.8%
Qifu Technology. Inc. China 0.8%

A "weighted average” measures a characteristic by the market capitalization of each stock. Price/book ratio is the weighted average of the price/book ratios of all the stocks in a portfolio. The P/B ratio of a company is calculated by dividing the market price of its stock by the company’s per-share book value. The price/earnings ratio is the weighted average of the price/earnings ratios of the stocks in a portfolio. “Earnings-per-share” is the portion of a company’s profit allocated to each outstanding share of common stock. “Earnings-per-share year-over-year estimate growth (next 12 months)” is the average next-twelve-month earnings-per-share estimate from one year ago for an individual company compared with that estimate today; note that this calculation is done on a company by company basis and is aggregated through a weighted average based on the individual company’s weight in the corresponding index. Also note that this characteristic is supplied directly by MSCI.

*Active defined as Portfolio weight minus MSCI EM Index weight. Holdings are subject to change.

SECTOR WEIGHTS
Sector Strategy Benchmark
Information Technology 21.5% 21.7%
Financials 21.5% 24.7%
Consumer Discretionary 16.5% 13.8%
Communication Services 13.6% 10.2%
Industrials 9.7% 6.5%
Materials 4.4% 5.8%
Health Care 4.2% 3.4%
Consumer Staples 2.3% 5.0%
Real Estate 2.3% 1.7%
Utilities 1.4% 2.7%
Energy 1.1% 4.4%
TOP 10 COUNTRIES
Country Strategy Benchmark
China 31.6% 29.6%
India 17.3% 19.2%
Taiwan 17.2% 17.1%
South Korea 14.2% 9.3%
Brazil 4.1% 4.5%
Saudi Arabia 3.2% 3.9%
United Arab Emirates 2.0% 1.4%
Turkey 1.5% 0.5%
South Africa 1.3% 3.2%
Poland 1.2% 1.1%
Regional Allocation
  • Emerging Asia 83.1%
  • Emerging Europe, Middle East, Africa 9.4%
  • Emerging Latin America 5.2%
  • Pacific 0.8%

Commentary (As of April 30, 2025)

Highlights

  • Emerging market equities experienced a turbulent month, selling off sharply after sweeping US tariff announcements, then rebounding as investors priced in softening trade terms.
  • The Trump administration’s tariff policies have roiled global markets. Within EM, Taiwan and South Korea are two of the most externally-exposed economies.
  • In China, the government has refrained from aggressive spending to boost consumption despite continued disinflationary trends. China’s economy is exposed to trade disruption and the Trump administration has been working to quantify non-tariff barriers. The Portfolio was overweight Chinese stocks as of quarter-end, with the majority of Chinese exposure in communication services and consumption-oriented businesses, which tend to be more domestically-focused and continue to look attractive on both self-relative valuation and growth characteristics.

Portfolio Attribution

The Portfolio underperformed the Index in April 2025. We use both bottom-up “stock-specific” and top-down factor categories to seek to forecast alpha for the stocks in the Portfolio's investable universe. Our bottom-up valuation factor was a negative indicator in April. Our corporate events, growth, technical (price momentum), and competitive strength factors were positive indicators. Our top-down macroeconomic factor was a negative indicator while currency and country/sector aggregate were positive during the month.

Investment Outlook

The Trump administration’s tariff policies have roiled global markets. Within EM, Taiwan and South Korea are two of the most externally-exposed economies. As of quarter-end, we were overweight South Korean and Taiwanese stocks in the Portfolio due in part to bottom-up valuation and top-down considerations. In China, the government has refrained from aggressive spending to boost consumption despite continued disinflationary trends. China’s economy is also exposed to trade disruption and the Trump administration has been working to quantify non-tariff barriers. The Portfolio was overweight Chinese stocks as of quarter-end, with the majority of Chinese exposure in communication services and consumption-oriented businesses, which tend to be more domestically-focused and continue to, in our view, look attractive on both self-relative valuation and growth characteristics. In Turkey, equities sold off and the lira fell late in the quarter after police detained the mayor of Istanbul, Ekrem Imamoglu, the primary opposition candidate in the 2028 presidential election. While the development is troubling, we are encouraged by the fact that President Erdogan has not abandoned the central banks hawkish interest rate policy. The Portfolio was overweight Turkish stocks as of quarter-end due in part to top-down considerations.

The market commentary expresses the portfolio managers’ views as of the date of this report and should not be relied on as research or investment advice regarding any stock. These views and the portfolio holdings and characteristics are subject to change. There is no guarantee that any forecasts made will come to pass. The securities identified and described above do not represent all of the securities purchased, sold or recommended for client accounts. The reader should not assume that an investment in the securities identified was or will be profitable. Past performance does not guarantee future results. For a description of our performance attribution methodology, or to obtain a list showing every holding's contribution to the overall account's performance during the quarter, please contact our product manager, Kevin Moutes, at 310-231-6116 or [email protected].