The MSCI Emerging Markets (EM) index delivered a robust 34.4% return in USD in 2025 and continued to make further gains into February 2026 – up 11.5% year to date at the time of writing.¹ Notably, profits (actual earnings growth), not valuation multiples (how much investors are willing to pay for those earnings), have been the major contributor to returns across most emerging regions. In 2025, earnings contributed 47% to EM total returns vs. just 13% to eurozone performance. What’s more, earnings growth accounts for all of the return for EM so far this year, compared to less than 20% for Europe and Japan, which have largely benefited multiple expansion. The resilience in earnings growth across emerging regions leads us to favor EM assets this year, particularly areas that are benefiting from structural themes that we expect will play out over years.

• EM Asia ex-China earnings are supported by macro tailwinds tied to Europe’s defense spending pivot and the AI capital expenditure (capex) super-cycle. Europe’s rearmament is reshaping procurement and South Korea has emerged as a fast-delivery, NATO-compatible supplier. In addition, the AI buildout in the US and China continues to cascade through the semiconductor stack, supporting Taiwanese exporters. These trends are spilling over into Malaysia’s packaging/testing ecosystem and Vietnam’s electronics base.
  
• Emerging Europe, Middle East and Africa (EMEA) are benefiting from growing consumer markets and increased investment in digitisation, technology and energy infrastructure. Moreover, declining inflation gives central banks room to ease further, which is happening in South Africa, Egypt and the Czech Republic, and supports this market that is heavily weighted to financials and materials.
• In Latin America, the earnings outlook hasn’t contributed quite as strongly to returns as in other emerging markets, but Latin America remains the clearest way to express the global grab for resources. Latin American economies—and the region’s investable universe—have heavy exposure to materials and energy, and commodity strength ultimately translates into earnings and dividends. Mexico grew earnings by 45% last year, and while Brazil’s earnings grew by a more modest roughly 14%, a supportive commodity backdrop and improving fiscal signals alongside low starting valuations amplified total returns.

One factor that ties the regions together is the US dollar. Historically, a weaker US dollar has supported EM assets by easing external financing conditions and improving the debt service for dollar-linked liabilities. While we don’t expect another 10% correction in the US dollar in the short term, we do foresee an environment where the dollar can gradually decline 2% to 4% per annum over the next five to seven years.

In summary, rising defense spending in Europe/NATO, the AI buildout across the US and China and global focus on energy and resource security all support strong earnings growth across emerging markets.

¹ As of February 11, 2026

Past performance is no guarantee of future results.

Image source: Shutterstock

JPMorgan Emerging Markets Growth & Income plc

Summary Risk Indicator

The risk indicator assumes you keep the product for 5 year(s). The risk of the product may be significantly higher if held for less than the recommended holding period.

Investment Objective: This Company aims to maximise total returns from Emerging Markets and provides investors with a diversified portfolio of shares in companies which the Manager believe offer the most attractive opportunities for growth. The Company can hold up to 10% cash or utilise gearing of up to 20% of net assets where appropriate.

Risk Profile:

• Exchange rate changes may cause the value of underlying overseas investments to go down as well as up.
• Investments in emerging markets may involve a higher element of risk due to political and economic instability and underdeveloped markets and systems. Shares may also be traded less frequently than those on established markets. This means that there may be difficulty in both buying and selling shares and individual share prices may be subject to short-term price fluctuations.
• Where permitted, a Company may invest in other investment funds that utilise gearing (borrowing) which will exaggerate market movements both up and down.
• External factors may cause an entire asset class to decline in value. Prices and values of all shares or all bonds and income could decline at the same time, or fluctuate in response to the performance of individual companies and general market conditions.
• This Company may utilise gearing (borrowing) which will exaggerate market movements both up and down.
• This Company may also invest in smaller companies which may increase its risk profile.
• The share price may trade at a discount to the Net Asset Value of the Company.
• The Company may invest in China A-Shares through the Shanghai-Hong Kong Stock Connect program which is subject to regulatory change, quota limitations and also operational constraints which may result in increased counterparty risk.

JPMorgan Emerging Markets Dividend Income plc

Summary Risk Indicator

The risk indicator assumes you keep the product for 5 year(s). The risk of the product may be significantly higher if held for less than the recommended holding period

Investment objective

The Company aims to provide a dividend income, together with the potential for long-term capital growth from a diversified portfolio of emerging markets investments. It is free to invest in any particular market, sector or country in the global emerging markets universe and there are no fixed limits on portfolio construction. The Company has the ability to use borrowing to gear the portfolio to up to 20% of net assets where appropriate. Gearing may magnify gains or losses experienced by the Company.

Risk profile

• Exchange rate changes may cause the value of underlying overseas investments to go down as well as up.
• Investments in emerging markets may involve a higher element of risk due to political and economic instability and underdeveloped markets and systems. Shares may also be traded less frequently than those on established markets. This means that there may be difficulty in both buying and selling shares and individual share prices may be subject to short-term price fluctuations.
• This Company may invest in non-investment grade bonds which increases the capital risk and may have an adverse effect on the performance of companies which invest in them.
• External factors may cause an entire asset class to decline in value. Prices and values of all shares or all bonds and income could decline at the same time, or fluctuate in response to the performance of individual companies and general market conditions.
• This Company may utilise gearing (borrowing) which will exaggerate market movements both up and down.
• This Company may also invest in smaller companies which may increase its risk profile.
• The share price may trade at a discount to the Net Asset Value of the Company.
• The Company may invest in China A-Shares through the China-Hong Kong Stock Connect program which is subject to regulatory change, quota limitations and also operational constraints which may result in increased counterparty risk.
• As the portfolio is primarily focused on generating income, it may bear little resemblance to the composition of its benchmark.