Screening for quality in emerging markets has become of paramount importance in recent years.
Emerging markets have evolved tremendously, and while the potential for growth remains, the focus is more about seeking exposure to companies across all sorts of markets that are embedded for growth over the long term, according to Matthews Asia.
Many investors are now getting emerging markets exposure through passive strategies, which are apt at capturing growth during periods of market stability and economic expansion. However, active strategies are poised to outperform during turbulent or down markets, as managers have the ability to navigate opportunities and search out new companies or markets that are outside of the purview of indexes to maintain a quality portfolio.
There are many other benefits of actively managed investing, but the key trait of the moment is the capability to maximize visibility and screen for quality in order to build strong platforms for future growth, according to Matthews Asia. Down the road, investors may find these long-term quality plays become the new sought-after companies, industries and geographies of emerging markets.
Actively managing emerging-markets exposure and screening for quality means hard examination of companies and their suppliers and engaging with the management of businesses, according to Matthews Asia.
The Matthews Emerging Markets Equity Active ETF (MEM), the Matthews Asia Innovators Active ETF (MINV), and the Matthews China Active ETF (MCH) all screen for quality.
MEM invests in emerging market companies with perceived sustainable growth potential, capitalizing on consumption and innovation trends. The fund utilizes an all-cap, company-first approach, which emphasizes fundamental research over top-down country or sector allocation.
MINV, a high-conviction, concentrated equity portfolio, invests in innovative companies in Asia ex-Japan, capitalizing on the new economy and rising disposable income in the region. MINV is worth consideration for investors who want a more thematic and concentrated approach.
MCH is a high-conviction equity portfolio that seeks companies benefiting from China’s domestic consumption. MCH uses an all-cap fundamental GARP approach driven by proprietary research, and combines long-term core holdings with more opportunistic ideas to provide consistency through cycles.
For more news, information, and analysis, visit the Emerging Markets Channel.