Mazza was particularly focused on the relative opportunity in the emerging markets where he saw the greatest dislocation in prices. Specifically, Mazza pointed out that emerging market long-term performance versus the U.S. is trading at a 17% discount while emerging markets showed a 6% discount to the EAFE developed markets.
“We have this mismatch in where we find the opportunity set,” Mazza said.
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Looking ahead, fundamentals may continue to support the EM growth story. Analysts anticipate earnings growth among developing markets to rise 19% this year, compared to 10% for U.S. companies. Price-to-earnings ratios also favor the emerging markets, especially with U.S. P/E ratios trading at lofty valuations following the ongoing bull run.
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