Emerging market equities have taken centre stage in 2025, with benchmarks advancing at a pace that has left the S&P 500 behind. The iShares MSCI Emerging Markets ETF has gained more than twenty per cent year to date, double the return of its U.S. counterpart. This shift has been aided by a U.S. dollar that has lost around seven per cent of its value, enhancing returns for investors positioned in foreign assets.
China, often treated as a drag in recent years, has instead been the largest single contributor to this resurgence. Accounting for nearly a third of the MSCI Emerging Markets Index, Chinese equities have rebounded with conviction. The iShares MSCI China ETF has risen more than 30%, a reflection of renewed confidence despite the country’s lingering structural issues. While the property sector remains under strain and domestic demand subdued, investors are finding appeal in policy measures that favour technology and capital market reform.
For portfolio allocators, the message is clear. Emerging markets are not a monolith, yet the collective forces of currency tailwinds, relative valuation appeal, and policy-driven optimism are working in their favour. The dynamic is particularly notable in technology-oriented segments, where global supply chain diversification is channelling investment into markets across Asia.
Fidelity Emerging Markets Limited (LON:FEML) is an investment trust that aims to achieve long-term capital growth from an actively managed portfolio made up primarily of securities and financial instruments providing exposure to emerging markets companies, both listed and unlisted.
