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.
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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