Emerging Markets Investors Must Be Aware of Challenges

Emerging markets (EM) investors have to walk around eggshells in today’s pandemic-ridden market. Even as more economies continue to rebound from Covid-19, the EM space is still one that is lagging behind—as such, EM investors should take heed and understand the challenges.

While EM can offer a value-added option for investors willing to do their due diligence, it helps to understand the current landscape surrounding issues affecting EM. In a recent Advisor Perspectives article, there were three challenges cited:

  1. Healthcare and income loss worries
  2. Stimulus measures by the government
  3. Limited exports and high levels of debt

“Today, emerging-market economies outside of China are confronting a slew of near-term challenges, primarily due to difficulties in controlling the COVID-19 outbreak as well as fiscal-stimulus constraints,” the article noted. “Assuming that these nations are better able to manage the virus over the next several months, we believe that the higher beta nature of these economies, coupled with a weakening of the U.S. dollar, could become tailwinds as the global economic recovery continues.”

To read the complete article, click here.

Check Out This Emerging Markets “GEM”

As global economies continue to reopen, the EM space is still a good opportunity to capture diversification and growth as a value-tilted option, but the right strategy that highlights due diligence is a must—enter the Goldman Sachs ActiveBeta Emerging Markets Equity ETF (GEM).

GEM seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the Goldman Sachs ActiveBeta® Emerging Markets Equity Index. The fund invests at least 80% of its assets (exclusive of collateral held from securities lending) in securities included in its underlying index, in depositary receipts representing securities included in its underlying index and in underlying stocks in respect of depositary receipts included in its underlying index.

GEM Chart

GEM data by YCharts

The index is designed to deliver exposure to equity securities of emerging market issuers. In order to obtain the highest quality equity exposure, GEM aims to acquire stocks based on four well-established attributes of performance: good value, strong momentum, high quality, and low volatility.

In a capital market environment where value is often pitted against growth in a battle of factors, GEM uses both in addition to other factors that can filter out the best equities that can capture upside, but at the same time, mute the effects of a downturn. Rest assured, GEM gives investors the diversification they seek with emerging markets, but only the best that EM equities have to offer using their strategy.

Additionally, for more market trends, visit ETF Trends.