10 | 2023 Investment Outlook | December 12, 2022 The growth story of EM is underpinned by several factors: ƒ Post-COVID recovery led by credit creation after a period of deleveraging ƒ Manufacturing revivals in certain markets led by the “China plus one” strategy that drives reshoring and friend shoring ƒ Commodity boom driven by resource-intensive decarbonization, which benefits resource-rich economies ƒ Boosts to productivity and growth led by digitalization across most EM regions ƒ Favorable political cycles in several pockets of EM It is important to note that since the MSCI index inception in 1988, emerging economies have weathered many storms—and yet they have outperformed developed markets, perhaps surprising many commentators. Since 1988, the MSCI EM Index has gained 9.7% annualized, outperforming many of the MSCI tracked asset classes, albeit with higher volatility. This is why we believe EM offers greater opportunity for active management to add value over the course of EM economic and market cycles. While drawdowns in EM are common, these often provide the best entry points for gaining exposure to the long-term positive trend return. Despite better growth, less debt and lower inflation, EM equities are trading at crisis-level valuations today. We believe that most investors are under-allocated to EM, considering the potential returns from this asset class. For many investors, EM remains unloved and clearly under-owned. The environment for investing in EM will never be easy, but by focusing on active country selection, stock selection and structural themes, we believe investors can reap the rewards of investing in these markets particularly at this stage of their economic and market cycle. “Most emerging countries, with the exception of China, started the 2020s in much better shape economically than in the previous decade.” Risk Considerations: The value of equities securities fluctuate in response to activities specific to a company. Investments in foreign markets entail special risks such as currency, political, economic, market and liquidity risks. The risks of investing in emerging market countries are greater than risks associated with investments in foreign developed markets. ESG Strategies that incorporate impact investing and/or Environmental, Social and Governance (ESG) factors could result in relative investment performance deviating from other strategies or broad market benchmarks, depending on whether such sectors or investments are in or out of favor in the market. As a result, there is no assurance ESG strategies could result in more favorable investment performance. When comparing asset classes, keep in mind that each has differences and that all investments involve risks, including the possible loss of principal. Investments in foreign markets entail special risks such as currency, political, economic, and market risks. The risks of investing in emerging market countries are greater than risks associated with investments in foreign developed markets.