The Big Squeeze: EM Mega Caps Up, Breadth Down
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William Blair844 FollowersFollow5ShareSavePlay(6min)CommentsSummaryEmerging markets equity returns have been driven by extreme mega-cap concentration, with index breadth collapsing to historic lows and masking weakness across much of the opportunity set.This concentration has distorted relative results for active managers, particularly those constrained by diversification rules or broad benchmarks, as small-cap underperformance and index construction limit flexibility.We view these dynamics as cyclical rather than structural, with history suggesting breadth should mean revert and opportunities broaden for managers able to invest across the market-cap spectrum. Vladimir Zakharov/iStock via Getty Images Emerging markets (EMs) are delivering a familiar paradox: strong headline returns but shrinking opportunity beneath the surface. Index breadth has collapsed to historic lows, with only about a third of EM stocks beating the benchmark, thanks to surging tech-heavy megaThis article was written byWilliam Blair844 FollowersFollowWilliam Blair is committed to building enduring relationships with our clients and providing expertise and solutions to meet their evolving needs. We work closely with the most sophisticated investors globally across institutional and intermediary channels. We are 100% active-employee-owned with broad-based ownership. Our investment teams are solely focused on active management and employ disciplined, analytical research processes across a wide range of strategies. We are based in Chicago with resources in New York, London, Zurich, Sydney, Stockholm, and The Hague, and dedicated coverage for Canada.