Story perspectives

Emerging Markets: Active Management Outshines Passive Strategies

9/4/2025

Summary

Story summary

The IA Global Emerging Markets sector comprises over 180 funds, with 20% as passive index trackers.
Active management is preferred for uncovering mispriced opportunities in volatile markets.
Vanguard and iShares dominate passive strategies, focusing on indices with significant exposure to China, India, and Taiwan.
Royal London’s fund aims for the MSCI Emerging Markets ex China Index, highlighting lower carbon intensity.
Emerging market equities may outperform developed markets during periods of strong economic growth.

History

Historical Context

The MSCI Emerging Markets Index was established in 1994, initially including 10 countries like Brazil and South Korea, reflecting a shift in global finance towards emerging economies. This trend, rooted in the 1970s when "less developed countries" were recognized for their growth potential, has evolved, with Vanguard and iShares now leading in passive investment strategies focused on markets like China and India.

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Story summary

The IA Global Emerging Markets sector comprises over 180 funds, with 20% as passive index trackers.
Active management is preferred for uncovering mispriced opportunities in volatile markets.
Vanguard and iShares dominate passive strategies, focusing on indices with significant exposure to China, India, and Taiwan.
Royal London’s fund aims for the MSCI Emerging Markets ex China Index, highlighting lower carbon intensity.
Emerging market equities may outperform developed markets during periods of strong economic growth.

1 / 2