Lazard Asset Management is betting the newfound appetite for emerging-market assets is only just starting, launching its first-ever exchange-traded fund focused on the region as investors look for ways to ride a rebound in international markets.
The actively-managed ETF will track roughly 70 hand-picked stocks from the developing world, according to the $265 billion asset-management arm of Lazard Inc. The move follows a months-long rally that’s lifted nearly every corner of risk assets, amid waning confidence in the world’s largest economy and the prospect of lower US interest rates.
“This is an asset class that had underperformed quite significantly over the last decade,” said Rohit Chopra, a portfolio manager at the firm in New York. “As active investors, we see really exciting idiosyncratic opportunities.”
The Lazard Emerging Markets Opportunities Fund ETF, ticker EMKT, will have Tencent Holdings Ltd., Contemporary Amperex Technology Co. Ltd., India’s InterGlobe Aviation Ltd., and Shoprite Holdings Ltd. among its holdings, capitalizing on opportunities from China’s electric vehicle sector to a leading food retailer in South Africa.
Emerging-market ETFs tracking stocks have attracted more than $24 billion in net inflows this year, Bloomberg data show, with equity benchmarks from India and Taiwan to Brazil and Mexico hovering near record highs.
The roughly $450 billion EM equity ETF space has long been dominated by a passive mindset, with such strategies accounting for more than 90% of total assets, the data show. But active approaches are now gaining traction — hauling in over 30% of year-to-date flows — as investors seek expertise to navigate complex regional dynamics and pinpoint opportunities across the developing world.
“This is one of the key, major asset classes where active matters, because indices themselves are backward-looking,” Chopra said. “Previous fundamental drivers are not going to work moving forward, and that’s why having an active approach should help us extrapolate that market inefficiency.”
About two-thirds of the EMKT portfolio will be allocated to companies that are category winners with durable competitive advantages, according to Chopra. The remaining third will go to areas where risk seems to be mispriced — where current market multiples don’t fully reflect the company’s fundamentals.
Late last year, Lazard Chief Executive Officer Peter Orszag said emerging-market equities were nearing an inflection point, citing light positioning, falling US yields and attractive valuations. Since then, the MSCI Emerging Markets Index has surged 30%, roughly double the gain in the S&P 500 Index. Also in 2024, Lazard hired former State Street Global Advisors executive Robert Forsyth to be the firm’s global head of ETFs, driving the development and expansion of the firm’s active ETF platform.
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