12 min read  |  In this paper, we explore the inherent characteristics of the emerging markets (EM) asset class through an economic lens and discuss the key investment criteria that differentiate emerging markets from developed markets. We also challenge the influence of existing benchmarks, which feature significant concentration problems at both the issuer and country level, on investors’ asset allocation decisions and managers’ security selection.

Emerging market equities trailed developed markets in the second quarter; however, performance varied by individual markets and segments within EM (Chart 1).  Regionally, North Asian countries’ mega cap technology stocks came under pressure from sweeping regulations changes, causing weak performance and offsetting strong performance in Latin America and EMEA.