Global Macro Input
At times in the global economic cycle, emerging-market countries are not attractive. Perhaps exports have stagnated, or rising inflation combined with excessive debt is causing capital to flee the region. When the macroeconomic environment is challenging for emerging market countries our portfolios overweight European companies with substantial exports to EM.
Many smaller, developed economies are home to companies with a large percentage of revenue derived from exports. Countries in Scandinavia, along with Switzerland and even Germany offer fertile hunting grounds for such investment ideas. Think of this as our defensive posture; a way to gain exposure to EM growth without directly investing in an emerging-market stock. In contrast, when we find attractive opportunities for direct investments in emerging markets they are often higher-beta stocks, creating a more aggressive investment strategy.