Emerging markets equity beta provides investors with a welcome source of portfolio diversification. But inefficient markets dominated by heavy retail trading also present a compelling alpha opportunity for portfolios tailored to the nuances of EM.
China’s state-owned enterprises (SOEs) and private listed companies differ in profit motives and capital access, posing a challenge to investors. Combining a quant approach to managing SOE exposure with fundamental insights offers a more compelling solution.
Some investors shy away from the emerging markets, put off by hazy accounting and financial reporting. Quantitative tools help cut through the fog, avoiding the pitfalls of misleading data and capturing opportunities not recognized by the market.