Acadian Asset Management questions the value of discretionary emerging market (EM) managers’ country allocation strategies. Their research shows that such positioning, though often backed by strong narratives, has delivered poor results over the past decade. “Timing EM equity markets is far harder than forecasting the countries’ economies,” says Ram Thirukkonda, Senior Investment Strategist at Acadian. “Adding to the challenge, country allocation is also a ‘low breadth’ activity, in that 24 emerging markets offer only a narrow set of independent calls for managers to make,” he adds.
While country focus suits discretionary managers and aids storytelling, the asset manager argues that EM investing is better served by diversified, high-breadth stock selection rather than narrow, country-driven approaches.
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