Emerging Markets awaken
In 2025, Emerging Markets (EM) delivered their strongest annual performance since 2017, outperforming both US and developed markets. This resilience, despite a complex global environment, reflects improving fundamentals, stronger policy discipline, and the growing role of EM within global production and supply chains.
2025: The year of resilience and comeback
A Supportive Backdrop for EM
The positive momentum observed in emerging markets in 2025 was supported by a weaker U.S. dollar, improving macroeconomic fundamentals across many emerging countries, and growing recognition of Asia’s essential role in artificial intelligence–related value chains. This broad-based outperformance among emerging markets reinforces our conviction that, far from being weakened by protectionist measures, emerging markets are gaining in autonomy and economic strength.
The foundations for further upside remain solid
While valuations are no longer at historic lows (with the EM index trading around 13.5x 2026 earnings1), EM equities continue to trade at a significant discount to developed markets (around 40% versus the US and 32% versus MSCI World2), despite superior earnings growth prospects and higher returns on equity. In our view, this valuation gap remains excessive given the convergence in risk premia between EM and DM.
Structural transformations underway
Artificial intelligence and structural trends are reshaping Emerging Markets
Beyond short-term valuation debates, EM economies are rapidly integrating artificial intelligence into industry, logistics, retail and services, driving productivity gains and lower marginal costs. This technological capability is reinforced by competitive access to renewable energy, which is becoming a strategic advantage in an increasingly fragmented global economy.
Improving financial discipline and corporate governance
After many years of capital dilution and weak shareholder returns, we are seeing tangible improvements in financial discipline, shareholder return policies and alignment of interests. This shift — already evident in South Korea, Japan and increasingly in China, could in our view open the door to a durable improvement in returns on invested capital, which we believe remains underappreciated by the market.
2026: The year of alpha, not beta
A supportive macro environment—but one that demands selectivity. Fundamentals are becoming key again
A weaker US dollar, historically high real rates and easing inflation provide EM central banks with room to gradually ease monetary policy, creating meaningful tailwinds. However, we are entering a phase of rising dispersion, where returns are likely to be driven more by earnings growth than multiple expansion, making selectivity more important than index exposure.
A favourable environment for FP Carmignac Emerging Markets
This is precisely the environment in which FP Carmignac Emerging Markets is well positioned. The strategy focuses on quality growth companies with strong balance sheets, good earnings visibility and genuine pricing power, while maintaining strict valuation discipline and risk management. The combination of structural growth leaders and more mature companies with more moderate growth but attractive valuations results in a balanced and differentiated profile, which has supported strong risk-adjusted performance in 2025.
We remain convinced that Emerging Markets are entering a new era, supported by earnings growth, innovation and diversification, and that a disciplined, active and conviction-driven approach is the most effective way to capture this opportunity.
1Sources: MS Research, Bloomberg, 12/01/2026.
2Sources: MS Research, Bloomberg, 12/01/2026.
FP Carmignac Emerging Markets
FP Carmignac Emerging Markets A GBP ACC
- Recommended minimum investment horizon
- 5 years
- Risk indicator*
- 6/7
- SFDR - Fund Classification
- Article -
*Risk Scale from the KIID (Key Investor Information Document). Risk 1 does not mean a risk-free investment. This indicator may change over time.
Main risks of the fund
Marketing communication. Please refer to the KIID/prospectus of the Fund before making any final investment decisions.
This document was prepared by Carmignac Gestion, Carmignac UK Ltd and/or Carmignac Gestion Luxembourg and is being distributed in the UK by Carmignac Gestion Luxembourg.
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FP Carmignac ICVC (the “Company”) is an Investment Company with variable capital incorporated in England and Wales under registered number 839620 and is authorised by the Financial Conduct Authority (the “FCA”) with effect from 04/04/2019 and launched on 15 May 2019. FundRock Partners Limited is the Authorised Corporate Director (the “ACD”) of the Company and is authorised and regulated by the Financial Conduct Authority. Registered Office: Hamilton Centre, Rodney Way, Chelmsford, England, CM1 3BY, UK (Registered in England and Wales under No 4162989). Carmignac Gestion Luxembourg SA has been appointed as the Investment Manager and distributor in respect of the Company. Carmignac UK Ltd and Carmignac Gestion S.A. have been appointed as sub-Investment Managers of the Company. Carmignac UK Ltd is authorised and regulated by the Financial Conduct Authority (FRN: 984288).
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CARMIGNAC GESTION Luxembourg - City Link - 7, rue de la Chapelle - L-1325 Luxembourg - Tel : (+352) 46 70 60 1 Subsidiary of Carmignac Gestion - Investment fund management company approved by the CSSF. Public limited company with share capital of € 23,000,000 - RCS Luxembourg B 67 549.