All Eyes On Emerging Markets

Core Viewpoint - Emerging market stocks have shown strong performance, with a 30.6% return in 2025, and are currently outperforming the S&P 500 by 14.4% through February 2026, marking the best start to a calendar year in three decades [1] Group 1: Performance and Trends - The MSCI Emerging Markets Index, which includes companies from developing nations like China, India, and Brazil, is experiencing significant returns and is expected to continue benefiting from robust global trade and investment [1] - Despite recent geopolitical tensions, emerging markets are anticipated to be supported by strong demand for AI-related technology from countries such as Taiwan and South Korea [1] Group 2: Valuation and Diversification - Emerging market stocks are trading at lower valuations compared to U.S. growth-oriented segments, with a forward price-to-earnings ratio of 13.1 for the MSCI Emerging Markets Index versus 21.3 for the S&P 500, making them an attractive option for portfolio diversification [1] - The MSCI Emerging Markets Index offers diversified tech exposure, particularly in the AI semiconductor supply chain, which differs from the concentration of AI companies in U.S. indices [1]