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Reflections on inflections: 15 years of TT’s Emerging Markets Equity Strategy

White Paper
30 April 2026

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Emerging Markets Portfolio Manager

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As we mark the 15-year anniversary of our flagship Emerging Markets Equity Strategy, which has achieved top-decile performance versus peers since inception, we have rarely been more optimistic on the asset class.

Earnings momentum, relative valuations and macroeconomic fundamentals all point to a period of strong performance for EM equities. However, in an increasingly fragmented global backdrop, outcomes will diverge significantly between countries, sectors and companies. Dispersion at the stock level within emerging markets is near its highest level in decades, creating a particularly rich environment for active stock selection.

From the outset, our strategy has been built around a simple but powerful premise: macroeconomic shifts drive opportunity, but company-level fundamentals determine how to monetise them. Our investment approach therefore uses a top-down framework to guide our bottom-up research resources toward the countries and sectors where change is creating the most attractive opportunities.

By following this repeatable process for the past 15 years, the strategy has outperformed its benchmark by over 3% per annum, with an information ratio of 0.56.

The following examples illustrate how recognising a range of macro inflections early, and pairing them with rigorous company analysis, can unlock strong investment returns.

Thematic inflection: the ‘Second Wave’ of consumption

One of the earliest examples of this framework in action was the evolution of EM consumption patterns.

Before the strategy began, much of the emerging consumer story had been about necessities – those physiological needs such as food, shelter and clothing at the bottom of the Maslow pyramid. As countries urbanised and real incomes grew, a broadening middle class fuelled demand for consumer products ranging from cars and washing machines to processed foods and branded beers.

However, as the wealth of the emerging middle classes continued to grow, so too did their aspirations. Health, education and financial security became more pressing needs, and it was in these areas that we identified a fresh leg of emerging consumption gathering momentum in the early years of the strategy.

Our process directed research towards companies exposed to these themes. In healthcare, inadequate state resources, growing ‘lifestyle’ diseases and ageing populations created a perfect storm. We therefore invested in well-positioned private hospital groups in EMEA and India, such as Life Healthcare. Meanwhile, we noted that Brazilian post-secondary education rates were extremely low, and that the government had encouraged the private sector to help solve the problem by offering tax incentives. This led us to invest in private education provider Kroton. Finally, we observed strong growth in the wealth management, brokerage and insurance industries as rising real incomes and assets enabled people for the first time to pay into a pension fund, buy mutual fund products, or participate in various insurance schemes. This drove a range of investments for the strategy, including China Galaxy Securities, Qifu Technology, BB Securidade and XP, as well as Indian banks ICICI, HDFC and Axis. Over the life of the strategy, our selected ‘second wave’ beneficiaries have added +14.9% of alpha.

Structural inflection: Artificial Intelligence and Asia’s technology value chain

More recently, we were early to spot the transformational potential of AI, and have been monetising this in the portfolio for several years.

The leading manufacturers of chips and other technologies that are powering the AI revolution are based in Asia, most notably Taiwan and Korea. They were trading at substantial discounts to their western peers, and we took the opportunity to build large exposure to the so-called “picks and shovels” of the AI thematic. Korea and Taiwan subsequently generated +4.0% and +3.8% of alpha, respectively, in 2025. In fact, Korea-based SK Square is the single largest stock contributor since the fund’s inception, generating +5.2% of alpha. It is a key beneficiary of increasing demand for high bandwidth memory from AI and machine learning. 

This is an example of a theme that we are still playing in the portfolio today. Importantly, the current technology cycle appears fundamentally different from previous ones. In earlier periods, technology demand was heavily driven by highly cyclical consumer electronics. Today, a significant portion of demand is underpinned by US hyperscaler capex related to AI and data infrastructure. With major technology platforms continuing to commit substantial investment budgets, this demand is proving extremely resilient, and we continue to see upward earnings revisions in our meetings with management teams across the sector. That said, this theme is clearly now well understood by the market, and we have been selectively taking profits in recent months. 

Regime inflection: from EM bear-to-bull market

Cyclical inflections are often no less powerful. The period from 2015 to 2017 provides a clear example of how our process adapts to changing market regimes.

In 2015, emerging markets faced a challenging backdrop. Concerns around China’s growth trajectory, commodity weakness and a strong US dollar weighed heavily on sentiment.

Our top-down analysis recognised these headwinds early, and we positioned the portfolio more defensively, upping exposure to countries such as the UAE and sectors like insurance, whilst increasing cash. As a result, we were able to generate relative outperformance in a weak market.

Crucially, however, we then identified that macro conditions were becoming more supportive, with China stabilising and the US Fed being more dovish than expected. The world’s major economies were beginning the first synchronised acceleration since the Global Financial Crisis and reflation was the topic du jour. We therefore increased exposure to cyclicals, materials and risk-sensitive markets with country-specific catalysts such as Argentina.  

The result was strong alpha generation, not only in the down-market of 2015, but also during the subsequent rallies of 2016 and 2017.

It is worth noting that we appear to be in the midst of another positive regime shift, with EM equities recently delivering strong absolute and relative returns. We believe this is sustainable for several reasons. Earnings momentum is improving across much of the asset class and, importantly, the breadth of revisions is broadening beyond a narrow group of large-cap index constituents. Moreover, relative valuations remain attractive versus developed markets and ownership levels still leave room for higher allocations. A lack of dollar strength is another important pillar of the argument. Whilst recent geopolitical events have seen the dollar appreciate, we believe this will be temporary as the US continues to face structural fiscal pressures, and Trump’s erratic style of leadership is undermining investor trust.

Country inflection: Argentina’s shock therapy

Country-specific inflections have also been a consistent source of opportunity. For example in Argentina, President Milei was elected in late 2023 based on a radical programme of economic shock therapy that aimed to tackle Argentina’s root problem: its fiscal deficit. He set about making sweeping changes, rapidly converting a primary fiscal deficit into a surplus, bringing runaway inflation back under control, and unlocking a new IMF deal.

Our process is particularly attuned to these types of opportunities. When a country moves from persistent dysfunction towards credible reform, the potential for asset re-rating can be substantial.

We were early to spot the transformational potential of Milei’s reform programme, increasing exposure from around 1% in the spring of 2023 to almost 9% in the months after the election. With Milei promising to unleash the country’s potential in the energy and commodity sectors, we initiated positions in oil & gas companies operating in Vaca Muerta, one of the world’s most prolific shale basins. After a sharp rally in these names, we shifted much of our exposure into selected banks, which were trading as low as 1x trailing book value, despite having a very strong credit growth cycle ahead of them. Argentina generated +7.9% of alpha in 2024.    

Shifting opportunity set – same process

Reflecting on the past 15 years, performance has not been driven by a single type of opportunity or market inefficiency. Instead, it has come from applying a repeatable process: identifying macro inflections early, directing research accordingly and investing in the companies best positioned to benefit. As can be seen, we have had a diverse range of top-down themes that have generated alpha. This is also true at the stock level. Since inception, our held stock winners have contributed 177% in relative performance, yet the largest of these has only added c.5%.

Dispersion of Stock Returns

Source: Bloomberg, MSCI, TT International.


This ability to identify a wide range of winners across the asset class is crucial as the opportunity set naturally changes over time – a point demonstrated by the shifting composition of the emerging markets index itself. Technology has become a much larger component, while sectors such as Energy have declined. Geographically, Asia has increased in importance, while countries such as Brazil, Mexico, Turkey and South Africa have become less prominent. We believe this reinforces the importance of maintaining a flexible, non-siloed investment approach.

Our team structure is predominantly built around generalists that focus on broad regions with overlapping responsibilities. This avoids members of the team becoming pigeonholed, focusing on one country or sector, and losing the ability to compare it to other opportunities in the asset class over time. It also helps avoid having ‘stranded’ research resources focusing on areas of dwindling importance or even those that move out of the investment universe altogether. When countries and sectors are out of favour from a macro perspective, we do not feel the need to keep investing in them simply because we have a dedicated resource. Our team can look across the asset class, ensuring capital is allocated to the most attractive opportunities, and responding dynamically to macro inflections, wherever they occur.

We believe this structure and process will be even more effective as we move into a multi-polar world characterised by elevated volatility. Against this backdrop, stock-level dispersion in EM is increasing, and is near its highest level in decades. 

Economies are at different stages in their cycles, policy frameworks continue to diverge, and geopolitical dynamics are polarising outcomes across markets. In this environment, identifying inflection points becomes even more valuable. The opportunity set remains richer than ever, but it requires a disciplined process to navigate successfully.


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