It is time to take another look at emerging markets, the author says. Emerging markets are not the weak link in global equities – they may in fact be the stronger foundation.

The following article comes from Archie Hart, portfolio manager, emerging market equities, at Ninety One, a UK-headquartered asset management firm (more about Hart below). He argues that in a world where much volatility comes from developed markets rather than emerging ones, investors must reappraise where to allocate assets. The editors are pleased to share these views; the usual editorial disclaimers apply. To comment, email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com

For decades, emerging markets were shorthand for volatility risk. Their equity markets were one and a half to two times more volatile than their developed peers, and many investors treated them as a peripheral allocation rather than a core holding. That perception lingers, but it no longer reflects reality. 

Today, that picture looks very different. The gap has steadily narrowed and, in some periods such as the March 2020 pandemic sell-off, US equities were more volatile than emerging markets.

That shift is no accident. It reflects not only changes in index composition, but also a deeper transformation. Over the past two decades, many emerging market economies have embraced pragmatic policies, stronger fiscal discipline, and institutional reform. At the corporate level, disclosure standards, governance and operational practices have converged with global norms. Collectively, these reforms have reshaped what it means to invest in emerging markets.

The EM-ification of developed markets
Not only has emerging market volatility fallen, but the reverse has also been true: developed markets have started to look more like emerging ones. Inflation shocks, abrupt policy pivots, and heightened political risk are no longer confined to emerging markets.

This “EM-ification” of developed markets has blurred the old distinctions. The world where developed markets were synonymous with stability and emerging markets with risk has gone. Investors now face a more level playing field – and in some cases, emerging market fundamentals are stronger. Fiscal positions are often more conservative, central banks more orthodox, and policy direction more predictable in emerging markets than in parts of the developed world.

For global equity portfolios that remain structurally underweight emerging markets, this shift demands attention.

Stronger foundations, better resilience
The past five years have provided repeated stress tests. In 2020, emerging markets weathered the pandemic downturn better than the US. In the first half of 2025, despite radical trade policy changes in Washington and conflict in the Middle East, emerging market equities again held up well.

Why? Because the policy backdrop in many emerging market economies is clearer and reforms more consistent and deeper. China has reaffirmed the role of the private sector. India is pouring concrete into infrastructure. The Gulf states are pressing ahead with economic diversification. Asia continues to anchor the global technology supply chain.

Economic, fiscal, and monetary policies across emerging markets have become more orthodox, better understood, and more credible. And the corporate landscape has advanced too: governance, disclosure, and transparency standards have risen sharply over the past two decades, strengthening investor confidence.

The opportunity set today
Of course, emerging markets are broad and diverse. Careful stock selection matters. But the breadth of opportunity is striking:

-- China: Semiconductor firms such as GigaDevice and Anji Microelectronics are at the intersection of global AI demand and China’s domestic push for self-sufficiency. Tencent, through WeChat, has created an ecosystem that underpins payments, shopping and travel for a billion users; 
-- India: Infrastructure investment is accelerating, with 50 new airports under construction – echoing China’s transformation two decades ago; 
-- UAE: At a time when much of the world is retreating behind barriers, the UAE is doubling down on openness to trade, capital and people; and 
-- Brazil: Interest rates of 15 per cent have stifled growth, but such levels are unsustainable. A turn in the rate cycle could release long-pent up opportunity.

From perception to reality
The perception of emerging markets as the volatile corner of global equities is outdated. Volatility has converged with – and at times fallen below – developed markets. Reforms in Brazil, South Korea, India and elsewhere have lifted governance and transparency. Companies are increasingly aligned with international standards.

Meanwhile, developed markets have absorbed many of the risks once associated with emerging markets. The lines have blurred. In some respects, emerging markets now look like the steadier partner.

Time to reassess allocations
Emerging markets have been transformed. They are no longer defined solely by volatility, but by resilience, stronger fundamentals, and pragmatic policy. For institutions, the challenge is that allocations have not kept pace. Portfolios remain structurally underweight at a time when EM offers both growth and stability, while developed markets grapple with their own uncertainties.

The “EM-ification” of developed markets has rewritten the investment playbook. Emerging markets are not the weak link in global equities – they may in fact be the stronger foundation. For long-term investors, it is time to reassess.

About the author

Archie Hart is a co-portfolio manager for the Emerging Markets Equity and Emerging Markets ex China Equity strategies in the 4Factor team at Ninety One. He joined Ninety One in 2008 from WestLB Mellon Asset Management where he was responsible for managing Latin American portfolios and maintaining the analytical coverage for this region. Prior to this, Hart worked for Deutsche Bank for seven years, starting as head of regional research in Hong Kong, then becoming a regional media analyst, and moving to London where he marketed Deutsche’s Asian equity product to institutional clients. Prior to this, Hart worked for BZW Asia in Hong Kong where he sold Asian equities to clients. Also in Hong Kong, Hart worked as an investment analyst for Crosby Securities before being promoted to head of Hong Kong research and deputy managing director and subsequently moving to their sales team. He started his career at Royal Life Fund Management in London as an investment analyst.