Emerging markets income
Why emerging markets for income investing
While most often associated with growth investing, emerging markets (EMs) represent an appealing income universe for today's active investors with a total return mindset. We believe the breadth of the universe and underlying growth make for a powerful combination for investors’ portfolios.
Matt Williams explains why the Emerging Markets Income Equity strategy could be a compelling choice for investors seeking both growth and income.
Active opportunity
Highlighting the dividend strength in EMs, ~85% of companies pay a dividend, with nearly 40% yielding over 3% – comparable to developed markets (DMs)1,2,
Income delivery
Tapping into the high-income potential of EMs offers access to attractive opportunities as part of a diversified portfolio designed to generate strong total returns
Growth potential
Averaging a compound annual growth rate of ~12% since the early 2000s, dividends in EMs have grown at an unprecedented pace – outpacing DMs3
Total returns’ two components
Income is the lifeblood of total returns over time. It not only comes in the form of dividend distributions, but also represents the cash flow that companies generate and reinvest to grow tomorrow’s income.
Since 2000, there have been two components behind the MSCI EM Index’s total return – earnings growth (i.e., price return) and dividends. And since that time (Dec. 2000), dividend returns in EMs have been among the highest relative to other regions.
By leveraging the high and growing income in EMs, we believe that active investors may access attractive opportunities as part of a diversified portfolio capable of generating strong total returns.
Why Aberdeen Investments for emerging market income investing
At Aberdeen, we believe in a two-pillar approach – 50% high dividend and 50% dividend growth – to capture the income and growth opportunity in today’s emerging markets, along with:
An actively managed, style agnostic, and all-cap proposition, focused on bottom-up stock selection and delivering a consistent performance profile
A thorough understanding of corporate cash flow dynamics is fundamental to managing an income mandate
Building on attractive upside (108%) and downside capture (95%) characteristics and strong information ratio (0.81) since inception4,5
Why now
While tariff changes are part of a structural change that brings macroeconomic uncertainty in the near term, they present potential opportunities for EMs over the medium and long term. Historically, EM performance has been tied to the global investment cycle, and we believe we are embarking on a new one.
At a strategy level, our stock insights can be grouped into the following core investment pillars:
Technology as a catalyst
With increasing demand for advanced computing and the rise of generative artificial intelligence, we believe EM tech companies – especially producers of semiconductors – are well-placed to benefit from growing needs for advanced computing power.
Infrastructure
We believe EM countries, as technology owners and low-cost industrial metal providers, are in a prime position to benefit and stand to play a central role in the years to come, as demands rise for robotics, autonomous driving, and data centers accelerate, and outdated electricity networks require urgent upgrades.
Domestic brands
As EMs continue to develop and modernize, rising incomes are fueling a growing middle class and increased consumer demand. This surge in domestic consumption presents a prime opportunity for investors, especially in leading local brands with strong market share and dividend potential.
Learn more about our Fund
abrdn Emerging Markets Dividend Active ETF
Ticker: AGEM
Here we provide important information about our exchange-traded funds (ETFs), investment strategies, and regulatory disclosures.
- Jefferies, 2023 actual.
- Bloomberg, March 2025.
- FactSet, Jefferies Equity Research, March 2025.
- Aberdeen, as of May 31, 2025
- Inception date: December 13, 2012.
