2Q2025 - Emerging Markets Growth Commentary
We remain optimistic about emerging markets’ long-term prospects, supported by trends like urbanization, healthier balance sheets, and attractively valued quality businesses—allowing us to invest without paying a premium for growth & resilience.
- Emerging market equity returns, as measured by the MSCI Emerging Markets Index, were positive over the period, mainly driven by stronger performance in Taiwan, South Korea, and China. At a country level, Saudi Arabia and emerging markets businesses listed in Ireland and Singapore were the largest detractors from the Index return.
- The Polen Capital Emerging Markets Growth Composite Portfolio outperformed the MSCI Emerging Markets Index for the quarter, driven entirely by security selection, with country and sector allocation both negative detractors.
- The top contributors to relative returns were Tencent Music Entertainment, Alibaba (not owned), and dLocal. The largest relative detractors were Wizz Air, PDD Holdings, and E Ink Holdings. The largest absolute detractors were Wizz Air, PDD Holdings, and Meituan.
- During the quarter, we reduced exposure to companies vulnerable to weak Chinese discretionary consumption and heightened competition in China’s consumer technology sector. Instead, we reallocated capital to competitively advantaged businesses in structural growth manufacturing industries, where Chinese producers are gaining share globally beyond the emerging markets.
- By consistently seeking high-quality, self-financing growth companies with sustainable advantages, we position the portfolio to capitalize on undervalued opportunities and aim for above-average, long-term client returns, even amid global uncertainty.