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Figure7BrazilianRealversusUSDollarEquities.Figure8MSCIemergingmarketequitiesversusdevelopedequitiesannualreturnsFigures8and9belowshowtheperformanceoftheMSCIEmergingMarketsindexovertimeversusthesameforkeydevelopedeconomies.Whilstweremainstructurallylongintheemergingmarketspacewerecognisethattheremaybesomeshorttermunderperformanceversusitsdevelopedpeersgivenaameteoricrisesinceits2008lowsandbaheightenedinationaryenvironmentwithresultingpoliciesthatstandtoslowgrowth.Howeverasinationconcernsinevitablysubsidethelongtermrelativeoverweightcaseshouldonceagaingaintraction.Indeedgure10showsthatthereisstillvalueinEmergingMarketstodaywhencomparedagainstdevelopednationpeersonapricetoearningsbasisevenaftertheirrecentstrongperformance.ExampletradesGeographicallywewouldbereducingweightingsincountriesthatfaceappreciatingcurrenciesandinationarydrivenmargincompressione.g.Chinaorthosecountriesthatriskaslowdowningrowthemanatingfromstabilisingcommoditypricese.g.Brazil.Ontheindustryfrontwesuggestfocusingonindustriesandcompaniesthathaveanexposuretoandstandtobenetfromthecontinuednetmigrationofworkersfromruraltocitylocationse.g.nancialservices.ExchangeRateBRLperUSDSourceFactSetPricesMSCIEmergingMarketMSCIUSASourceFactSetPrices