4Q2024 - Emerging Markets Growth Commentary
While short-term share prices may not always reflect business fundamentals, we maintain confidence in the long-term growth prospects of our Portfolio holdings. We are also enthusiastic about the opportunities in emerging markets and the potential for recent developments in China to help boost investor sentiment.
- Over the fourth quarter, the Polen Emerging Markets Growth Composite Portfolio returned -5.80% gross and -6.00% net of fees, outperforming the -8.01% return of the MSCI Emerging Markets Index.
- During the period, emerging markets were mainly dragged down by weaker performance in India and South Korea.
- The Consumer Discretionary and Financials sectors drove most of the Index return. This was primarily driven by strength in the large China e-commerce companies, banks, and insurers.
- The Information Technology sector pulled back, with the Korean semiconductor-related companies notable laggards. The Energy sector was also weak on a softer oil price.
- The top contributors to relative return over the period were dLocal, FPT Corporation, and Alibaba (zero weight). The top absolute contributors were dLocal, TSMC, and FPT Corporation.
- The largest individual detractors from relative performance were PDD Holdings, TSMC (underweight), and Xiaomi (zero weight). The largest absolute detractors were PDD Holdings, Anta Sports Products, and Genting Singapore.
- Our focus remains on identifying companies with competitive advantages that we believe can generate long-term earnings and cash flow growth, regardless of commodity fluctuations or economic cycles.