Actively invested in emerging markets and Asia

Actively invested in 
emerging markets
Asia

Solutions across the spectrum

EM banner illustration

A range of long-term tailwinds support emerging markets (EMs). They include a demographic advantage over the West, manufacturing capabilities, resource advantages, digitisation and a focus on developing infrastructure.

With our broad EM offering, covering emerging and frontier markets, large and small caps, fixed income and Asia specialisation, Federated Hermes has the experience, the know-how and the connections to meet an array of investor requirements and help them capitalise on this vast and growing trend.

Emerging markets: Why now?

EMs account for 82% of the world’s population but currently only 26% of global market capitalisation.

World population:

World growth:

World economy:

World cap:

Source: Bloomberg as at November 2022

Emerging Markets: 
What's driving change?

Decarbonisation, tech innovation, demographic shifts. We take a look at the long-term megatrends reshaping the investment landscape in some of the world’s fastest-growing economies.

AN EMERGING OPPORTUNITY:

Four key attributes of emerging markets

The growth story:

The commodities story icon

The commodities story:

The inflation question:

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Valuations:

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A demographic advantage
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EMs tend to have a younger population, with a high percentage of people of working age and a lower percentage of non-productive older citizens. This can result in rising levels of per capita income.

Demographic shifts favour emerging markets

Source : World Data Lab projections.
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An expanding middle class
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Income growth, urbanisation and demographic changes create a growing pool of middle-class consumers. This drives increased revenue for companies through premiumisation.

A powerful growth engine
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Emerging markets are forecast to consistently outperform developed markets for growth in the coming years. By 2030, Asian countries are forecast to be the first, third and fourth positions globally in terms of GDP (China, India, Japan).

Emerging market GDP will account for almost half of top 15 countries by 2030

Emerging Markets GDP Progression

Top 15 in 2020

Top 15 in 2030 (forecast)

Emerging market GDP is forecast to amount to almost 50% of the top 15 countries in the world by 2030

Source: IMF, HSBC, Statista, Federated Hermes

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Electrification
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The move away from fossil fuels will be a strong economic driver. EMs are less weighed down by legacy grids and so are better placed to roll out smart grids, enabling two-way power flow and multi-stakeholder interactions.

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Infrastructure
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Developing countries have fewer legacy issues than DMs when building new infrastructure. This confers an advantage when building smart cities; 5G networks, and transport networks.

5G base stations in the US and China (2019 to 2021)

Source: S&P Global Market Intelligence as at February 2022

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Resources
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Many of the key resources needed for future growth and the energy transition are located in emerging markets.

The attraction of Asia

Huge opportunities lie in emerging markets’ key geographic region

Asia enjoys a range of structural advantages that potentially make the region more resilient than developed economies in the face of growing cyclical and structural economic headwinds.

Our EM solutions

Whether you’re interested in broad exposure to emerging markets or want to focus on a particular aspect of the emerging market opportunity, our product range provides the flexibility to invest in EM with a range of preferences in mind.

GLOBAL EMERGING MARKETS

Global Emerging Markets Equity

Delivering holistic long-term returns through investing in structural thematic trends

Global Emerging Markets SMID Equity

Applying the GEMs philosophy to the small- and mid-cap universe

Global Emerging Markets ex-China Equity

Applying the GEMs philosophy to EM opportunities beyond China

ASIA EX-JAPAN

Asia ex-Japan Equity

Employing a contrarian investment style to drive long-term returns

China Equity

Applying a contrarian investment style to China equities

EMERGING MARKETS DEBT

Emerging Markets Debt

Delivering alpha through our expertise in a misunderstood market

Why Federated Hermes?

Federated Hermes has been actively investing in emerging markets for more than two decades.
Our understanding of EMs is reflected in our approach to managing risk, capturing value and engaging effectively with companies to maximise the potential long-term returns for our clients.
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Managing risk

Capturing value

Engaging effectively

Want to know more about our experience in Emerging Markets?