World markets registered another quarter of strong returns against a backdrop of synchronized global growth, resilient manufacturing and services activity in China, and a potentially stimulative tax reform package in the U.S. Gains were broad based across asset classes, including emerging markets which gained 7.4%.
Absolute returns have been strong, but it has been difficult for those of us applying a value discipline to outpace the MSCI Emerging Markets Index, in which the largest constituents and leading performers are a concentrated group of highly valued growth stocks.
Emerging markets continued their rally during the third quarter, extending the asset class’ year-to-date return to 28%. The driving forces behind the market have remained fairly constant through much of the year, including synchronized global economic growth, a benign inflation environment, continued unorthodox central bank policies, supportive capital flows, and increased confidence in China’s reform efforts. Market leadership continues to be very narrow, concentrated in a handful of large-cap technology stocks and the Chinese real estate and automobile sectors. Embedded in these consen
The Altrinsic Emerging Markets Portfolio gained 6.0% during the second quarter in U.S. dollars. By comparison, the MSCI Emerging Markets Index rose 6.3%. Markets benefited from synchronized, albeit modest, global economic growth, strengthening Chinese consumer spending, earnings expectations, and positive portfolio flows into the asset class. A fresh wave of corruption allegations in Brazil and escalating tensions involving North Korea impacted local markets but seemed to be shrugged off by the broader emerging markets.
The Altrinsic Emerging Markets Equity portfolio gained 10.2% during the first quarter of 2017. By comparison the MSCI Emerging Markets Index gained 11.4% in U.S. dollars. Emerging market equities and currencies rebounded strongly during the first quarter, as protectionist policy rhetoric from the Trump administration softened, reform agendas gathered pace in several major emerging countries, concerns about economic stability in China eased, and the outlook for corporate profit growth improved.
Emerging markets delivered strong gains during the third quarter, returning 9.0% as measured by the MSCI Emerging Markets Index in U.S. dollars. The Altrinsic Emerging Markets Equity Composite returned 8.8% during the same period. Stronger earnings growth and higher local bond yields in the emerging markets attracted supportive portfolio flows. Rising commodity prices and a stable U.S.