Urbanization, digitalization, and the rise of the global middle class are long-term trends fueling significant growth across emerging markets. WCM focuses on companies positioned to take full advantage of these trends, believing they stand to generate strong and consistent revenue and earnings growth over the long term. Technology, consumer, and healthcare companies play nicely into these growth trends.
Building a portfolio that is different from the benchmark is critical to investment success in emerging markets, WCM believes. In fact, if you invest in the MSCI Emerging Markets Index, about 50% of your portfolio is composed of financials, telcos, energy, basic materials, heavy industry and utility companies. Not only do these sectors grow more slowly than their underlying economies, but they are dominated by state-owned entities that operate for the state, rather than for private shareholders’ benefit.
Over the last few decades, emerging markets economies have evolved from being almost entirely based on commodities and low-cost manufacturing to being more and more consumer-driven. In fact, today’s emerging-markets-based companies are delivering technology innovation not just for global consumption, but for their own regional use as well. WCM’s Emerging Markets strategy tends to be overweight to these consumer-driven sectors and industries, which WCM believes are driving the future growth in emerging markets economies.
WCM employs the same approach, process and investment framework across all of their global growth strategies. By leveraging a single team of global generalists, WCM is able to uncover patterns across global markets that can be missed by sector and regional specialists. For example, the speed of technology and information flow today enables a business success story happening one place in the world to be rapidly replicated elsewhere around the globe.