Post by Research Affiliates

Energy security is no longer a theoretical concern.    This exhibit shows that around historical energy shocks, the cumulative EM-to-U.S. total return spread improved from approximately –1.2% two months before the shock to about 2.6% in the shock month.    That is a meaningful shift for allocators thinking about resilience in a more fragmented global economy.    Emerging markets are not immune to geopolitical risk. But resource-rich EM economies may offer strategic exposure when energy, commodities, and supply security become market-moving forces.    In a world moving from globalization toward resource nationalism, portfolio diversification may need to account for who supplies the physical inputs of growth.    Read the full article “Guided by Fundamentals: Navigating Emerging Markets with Value” by Que Nguyen and Mário Albuquerque, CFA on the Research Affiliates website: https://lnkd.in/giAQfc2r     #EnergySecurity #EmergingMarkets #Geopolitics #PortfolioConstruction #MacroInvesting    Disclosures: https://lnkd.in/gZHv7ktm