Emerging Markets Equity Commentary | Q1 2019

Quarterly Letter

Equity markets rebounded during the first quarter, reacting favorably to U.S Federal Reserve’s shift to more accommodative policies and improving confidence on the U.S.-China trade negotiations.  Central banks turned dovish in response to tightening financial conditions and slowing global growth.  China’s reaccelerated fiscal stimulus and progress on the trade talks alleviated concerns surrounding its economic slowdown.  Emerging market equities reacted favorably, gaining 9.9% in U.S. dollars, as measured by the MSCI Emerging Markets Index.  By comparison, the Perterra Emerging Markets Fund, LP gained 11.3%.  As we look ahead, debt buildup during this long period of extremely low interest rates and rising fiscal imbalances remain key long-term risks.  Given this backdrop, your portfolio is concentrated in companies with balance sheet strength, solid free cash flow generation, and strong valuation support.