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Schroders: Emerging Markets Investment Outlook

August 2019

A monthly outlook reviewing the markets and the top-down, quantitative model Schroders uses to make emerging-markets country allocation decisions.


Key Points: 

  • Aggregate emerging markets (EM) valuations are close to their historical average on a price-earnings (P/E) basis and are below the long term average on a price-book basis.

  • Increased deployment of stimulus in China, an easing in US dollar (USD) strength, and positive steps from both sides with regard to trade conflict resolution could help support EM earnings, and therefore, provide upside risks to EM markets.
  • The prospect of tighter USD liquidity in the coming months, should the US Treasury ramp up debt issuance to rebuild its cash reserves, also bears monitoring. There is space for further monetary easing in several EM economies, and some countries have cut rates by more than expected in the past month.  


Investing involves risk, including the possible loss of principal. Foreign investments may be more volatile and less liquid than U.S. investments and are subject to the risk of currency fluctuations and adverse political and economic developments. These risks may be greater for investments in emerging markets. 

The outlook from Schroders Investment Management North America Inc. and Schroder Investment Management North America Limited (“Schroders”) refers to their proprietary top-down, quantitative, model which is used to make country allocation decisions across their emerging markets strategies. The outlook focuses on the positioning of the country model during the relevant period and may or may not reflect the actual country allocations of any Hartford Fund or account. 

The views expressed herein are those of Schroders Investment Management (Schroders), are for informational purposes only, and are subject to change based on prevailing market, economic, and other conditions. The views expressed may not reflect the opinions of Hartford Funds or any other sub-adviser to our funds. They should not be construed as research or investment advice nor should they be considered an offer or solicitation to buy or sell any security. This information is current at the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Schroders or Hartford Funds.

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