Ariel Investments Emerging Markets Value Q4 2024 Commentary

2025-02-23 14:20:00 ET

Summary

• Ariel Emerging Markets Value Composite fell - 9.99% gross of fees (-10.21% net of fees) in the quarter, trailing MSCI EM Index and MSCI EM Value Index, which declined -8.01% and -9.21%, respectively.
• Concerns surrounding the new U.S. administration’s policies, a strengthening U.S. dollar, slower economic growth in India and political turmoil in Korea drove the MSCI Emerging Markets and MSCI Emerging Markets Value Indices into the red.
• 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 and political turmoil in Korea drove the MSCI Emerging Markets and MSCI Emerging Markets Value Indices into the red. China’s economy also ended the year sluggishly, with September’s stimulus efforts losing steam and the recovery in consumer spending turning elusive. 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 Composite fell - 9.99% gross of fees (-10.21% net of fees) in the quarter, trailing both the MSCI EM Index and MSCI EM Value Index, which declined -8.01% and -9.21%, respectively. Over the trailing one-year period, the Ariel Emerging Markets Value Composite advanced +9.72% gross of fees (+8.66% net of fees), outperforming the +7.50% gain posted by the MSCI EM Index and the +4.51% return of the MSCI EM Value Index. ...

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