In 2023, emerging markets made up 37% of global output (in USD). OECD forecasts weightings to rise to 56% by 2050. LGIM believes this has important implications for investors.
“The capital asset pricing model assumes that only the market portfolio – a portfolio that includes every asset in the investable universe in proportion to its market weight – minimises volatility for any given return,” says Erik Lueth, Global Emerging Market Economist at LGIM. “On that basis, surely investors ignore a large asset class, and one that is imperfectly correlated with other assets, at their peril?”
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