Emerging markets: enough is not enough

Emerging markets deserve a larger, strategic and highly selective place in portfolios because the companies shaping global growth are increasingly found there.

• Investors benchmarked to the MSCI All Country World Index hold almost as much exposure to Nvidia, Apple and Microsoft as to all emerging markets combined, despite emerging markets representing about 60% of global GDP and 86% of the world’s population.
• The asset class is less homogeneous and externally dependent than its reputation suggests: China, Taiwan and South Korea make up two-thirds of the emerging-markets index, while domestic savings, pension systems and local capital markets have reduced reliance on foreign capital.
• Emerging markets contain global champions such as TSMC in semiconductors, SK Hynix in artificial-intelligence memory bottlenecks, Nu Holdings in Latin American digital finance and CATL in electric-vehicle batteries; China is also moving from imitation towards leadership in AI, semiconductors, robotics and biotechnology.
• The opportunity is uneven and cannot be captured by passive exposure: currency weakness, governance problems, state intervention, geopolitics, dilution and poor capital allocation can still destroy shareholder returns.
• At the end of June 2026, emerging markets represented approximately 12.2% of the MSCI ACWI, while they were expected to generate two-thirds of global growth; more than two-thirds of ACWI companies forecast to grow revenue by 20% annually over the next three years came from emerging markets.

Takeaway: Investors should treat emerging markets as a strategic allocation that is large enough to affect portfolio outcomes, selective enough to avoid weaker businesses and patient enough to capture compounding, while not mechanically weighting exposure by GDP or population.