Ariel Investments Emerging Markets Value Ex-China Q4 2024 Commentary

2025-02-23 15:16:00 ET

Summary

• Ariel Emerging Markets Value ex-China Composite decreased - 8.56% gross of fees (-8.80% net of fees) in the quarter, falling short of the -8.12% return of the MSCI EM ex-China Index.
• We initiated five new positions in the quarter.
• Uncertainty surrounding the potential impact of the new U.S. administration’s policies on Emerging Market equities presents an attractive entry point to one of the most mispriced asset classes in the world.

Markets worldwide defied expectations in 2024 led by the dominating performance of U.S. mega-cap technology companies and investor enthusiasm for artificial intelligence ((AI)) themed stocks. However, concerns surrounding the new U.S. administration’s policies, a strengthening U.S. dollar, slower economic growth in India, political turmoil in Korea and the prospect of wider fiscal deficits in Brazil drove the MSCI Emerging Markets ex-China Index into the red. Although uncertainty and volatility are likely to remain elevated, the patient investor knows “stock prices trade on fundamentals. And when those solid fundamentals shine through, share prices rise. ¹ ” Against this backdrop, the Ariel Emerging Markets Value ex-China Composite decreased - 8.56% gross of fees (-8.80% net of fees) in the quarter, falling short of the -8.12% return of the MSCI EM ex-China Index. Over the trailing one-year period, the Ariel Emerging Markets Value ex-China Composite advanced +4.36% gross of fees (+3.23% net of fees), outpacing the +3.56% return posted by the MSCI EM ex-China Index. ...

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