Do Emerging Markets Offer Portfolio Diversity?

The video discusses the challenges of achieving diversification in today's closely correlated markets, particularly in emerging market equities. It examines the bond market's influence on EM equities, noting the potential risks of rising bond yields. The video also explores differences within equity classes, highlighting the impact of passive investing. Finally, it identifies headwinds for EM investments, such as US monetary policy and valuations, while noting potential upsides like improving corporate profitability.

Why is it challenging to achieve diversification in emerging market equities today compared to 20 years ago?

• Markets are less correlated now.

• Emerging markets have a lower beta.

• Markets are more closely correlated now.

• Emerging markets offer more diversification safety.

What is one of the big risks for emerging market equities according to the second section?

• Decreasing bond yields in EM.

• Rising bond yields in EM.

• Stable bond yields in US.

• Decreasing bond yields in US.

What does the second section suggest about the ECB's actions?

• The ECB is expected to maintain current policies.

• The ECB is expected to increase interest rates.

• The ECB is expected to extend its QE program.

• The ECB is expected to reduce its QE program.

What is a potential headwind for emerging market equities mentioned in the third section?

• Decreasing corporate profitability.

• Stable US monetary policy.

• Rich valuations in developed markets.

• Increasing fund inflows.

According to the third section, what is a positive factor for emerging market equities?

• Decreasing corporate profitability.

• Decreasing fund inflows.

• Stable earnings numbers.

• Improving corporate profitability.