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How to Achieve Precision Exposure to Emerging Markets

Significant structural differences between countries are reflected in their equity markets.

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Lyxor ETF

Lyxor ETF

Among the building blocks of emerging markets (EM) exposures, country choice has been the primary source of risk. There are several idiosyncrasies to factor in when building and optimising EM portfolios, and country choice is an especially prominent right now given the political dynamics between the U.S. and China. First, it is important to note that within the EM block, there are significant structural differences between countries which are reflected in their equity markets. One indicative difference is varying levels of sensitivity to external market factors, such as the sensitivity of several EMs to the movements of developed markets (DMs) and the oil price sensitivity relative to EMs overall.

See the case studies by MSCI that demonstrate how to allocate more precisely to EMs

This article is for informative purposes only and should not be taken as investment advice. The opinions expressed by Fotios Kassianidis are his own, as at October 2019, and do not necessarily reflect the views of Lyxor International Asset Management or Societe Generale. Statements relating to past performance are not a reliable indicator of future results. Capital at risk. Please read our Risk Warning below.


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