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Emerging Markets

For wealth managers

Parametric's Emerging Markets Strategy is a systematic, rules-based investment process that gives clients access to the long-term growth potential of emerging markets with less volatility than indexes typically exhibit. Designed as a core holding, Emerging Markets emphasizes diversification and relies on a disciplined rebalancing approach.

Traditionally, emerging market indexes tend to have concentrated country allocation, with 75% of holdings in just five countries. Emerging Markets avoids the concentrated security- and country-level exposures that are inherent to other emerging market strategies using our equal-weight methodology. We seek to outperform the MSCI Emerging Markets Index over a full market cycle.

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The investment strategy described herein is designed to be implemented in a separately managed account (SMA) maintained by a qualified custodian. Investors should contact their financial advisor to establish an SMA. Parametric currently serves as a subadvisor to investment products offered and distributed by its affiliate, Eaton Vance Distributors, Inc., a registered broker-dealer. Parametric subadvises a fund with a strategy similar to the one presented herein. Learn more.

RISK CONSIDERATIONS:

All investment and trading activities risk the loss of capital, and no assurance can be given that the investment activities of a client’s account will achieve the investment objectives of such account or avoid losses. Direct and indirect investing in securities involve risk of loss that clients should be prepared to bear. Past performance is not indicative of future results. All information provided has been prepared solely for informational purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy.

There is no assurance that a separately managed account (SMA) will achieve its investment objective. SMAs are subject to market risk, which is the possibility that the market values of the securities in an account will decline and that the value of the securities may therefore be less than what you paid for them. Market values can change daily due to economic and other events (e.g., natural disasters, health crises, terrorism, conflicts, and social unrest) that affect markets, countries, companies, or governments. It is difficult to predict the timing, duration, and potential adverse effects (e.g., portfolio liquidity) of events. Accordingly, you can lose money investing in an SMA.

Diversification does not protect you against a loss in a particular market; however, it allows you to spread that risk across various asset classes.

The MSCI Emerging Markets Index is broad-based and is a free float-adjusted market capitalization index calculating total return, is net of foreign withholding taxes, and is designed to measure equity market performance in the global emerging markets.

It is not possible to invest directly in an index. Indexes are unmanaged and do not reflect the deduction of expenses, fees, and other expenses. Any index referred to herein is the intellectual property (including registered trademarks) of the applicable licensor. Any product based on an index is in no way sponsored, endorsed, sold, or promoted by the applicable licensor, and it shall not have any liability with respect thereto.

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How it works

Country selection
Sector and stock selection
Rebalancing

We start with a broad country universe and equally weight countries within each of the model tiers. We assign countries to tiers based on market cap and liquidity.

Once a country’s target exposure is determined, we set sector targets in each country in an attempt to move closer to an equal representation from each economic sector while taking practical liquidity considerations into account.

Systematic rebalancing brings countries back to target weights while still being mindful of practical considerations such as transaction costs.