Focus on Emerging Market Equities that benifit from stronger local currencies, rising living standards, and higher growth...
The past decade has been a good one for the dollar and US assets generally. But outperformance is always followed at some point by underperformance, and US markets are relatively overvalued. In particular, the dollar looks vulnerable for a variety of reasons, including the massive money printing in the US and its stretched fiscal and trade situation.
Just as emerging markets have struggled in the past with a strong dollar, they benefit from a weaker one. They must use dollars for international trade and so they have dollar debts, which are lessened by a weaker dollar. They are also often commodity exporters, and such prices benefit from a weaker dollar (since virtually all international commodities are currently priced and traded in U.S. dollars).
Many of the smaller Asian and Latin American countries will foreseeably benefit, as will some of the larger ones, like India. On top of that, they have generally faster economic growth than their developed rivals and are currently cheaper than usual.
We will acquire a portfolio of the most promising and well placed among them, in our opinion, where we believe there is good investment value.
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