Emerging markets have outperformed developed markets in 2025. In the year to the end of August, the Morningstar Emerging Markets TME Index has returned 9.3% in GBP terms, while the Morningstar Global TME Index returned 5.8%. Several attractive funds exist to offer exposure to this market segment.
Markets initially sold off following April’s US tariff announcements but later rebounded as confidence returned. The agreement of a tariff framework between the US and China played a key role in restoring investor confidence in China and emerging markets more broadly. This optimism was further supported by a weaker US dollar and a continued shift away from the narrative of US equity outperformance, prompting investors to reallocate capital to other regions.
Morningstar Analysts Hold High Conviction in These EM Funds:
Silver-rated JPM Emerging Markets Income is a standout quality-income option within the emerging markets space. The strategy benefits from strong leadership, JPM’s deep analytical resources, and a well-structured, disciplined investment process. Lead manager Omar Negyal targets a dividend yield that’s approximately 130% of the MSCI Emerging Markets Index’s yield. Before investing in any stock, the team thoroughly evaluates a company’s return on equity, free cash flow, and dividend policy to ensure dividend sustainability and long-term growth potential.
With its emphasis on value and quality, the strategy is well positioned to perform strongly in fundamentally driven markets as well as during down or moderately rising environments. However, it may lag in high-growth markets due to its relatively lower beta. Overall, the balanced approach with a focus on quality should help the strategy outperform over the cycle.
Silver-rated JOHCM Global Emerging Markets Opportunities employs a top-down approach, targeting growth-at-a-reasonable-price (GARP) stocks. The strategy is anchored in a rigorous top-down analysis of the 26 countries in the MSCI EM index. The management team uses a proprietary framework to score countries based on macroeconomic and structural characteristics, forming the foundation for portfolio construction. At the stock level, the managers focus on value and growth potential, using quantitative screens and company visits to identify attractive names.
The resulting portfolio is concentrated in 40–60 stocks and often features significant active bets at both the country and sector level. The fund’s GARP-driven approach positions it to perform well across a range of market environments, though its large country-level bets can affect its short-term performance profile. Over the long term, the team has demonstrated a strong track record, consistently adding value through a blend of top-down macro insights and bottom-up stock selection.
Gold-rated GQG Partners Emerging Markets Equity stands out as one of the most unconventional— and compelling— strategies in the emerging-markets space. While it leans toward growth, consistent with the firm’s “global quality growth” philosophy, it is style-agnostic. Lead manager Rajiv Jain intentionally maintains a flexible approach, arguing that strict adherence to a single style or the avoidance of entire segments can hinder performance, especially in the dynamic and often unpredictable emerging markets landscape.
When Jain identifies a wealth of attractive opportunities within a specific sector or country or, conversely, sees few, he is unafraid to take significant active positions, resulting in portfolio weightings that can diverge sharply from peers and benchmarks. Uniquely among emerging-markets managers, Jain also includes select US-domiciled companies with meaningful exposure to emerging markets, such as Nvidia NVDA and Meta Platforms META, when he believes they align with the fund’s objectives. This flexible, conviction-driven approach has contributed to the strategy’s strong appeal and long-term potential.
Bronze-rated Lazard Emerging Markets benefits from an accomplished team and a disciplined investment approach. The team’s bold yet patient relative value process is a key differentiator. Lead manager James Donald focuses on companies with above-average returns on equity trading at below-average valuations. The portfolio typically holds 70 to 90 stocks that meet strict profitability criteria.
A significant strength of the strategy is Lazard’s deep emerging-markets expertise. The dedicated eight-person team leverages insights from a broader platform of about 55 emerging-markets investment professionals, providing comprehensive coverage and robust idea generation across a vast opportunity set. The strategy boasts a strong long-term track record and has historically shown resilience during market downturns.
