EM GDP growth continues to outpace developed economies, driven by demographics, consumption and digital adoption — but the drivers differ by region, making differentiation essential.
A day in your life: Powered by emerging markets
Emerging markets capture long-term growth by connecting dynamic, fast-evolving economies to the products and services people rely on throughout the day - from morning coffee and mobile networks to transport, technology, and evening entertainment.
Franklin Templeton. For illustrative and discussion purposes only. References to particular sectors are only for the limited purpose of illustrating general market or economic conditions and are not recommendations to buy or sell a security or an indication of any portfolio holdings.
Emerging markets lead in key industries and will define the next digital cycle
| Goods | Producer | Market Share | Status |
|---|---|---|---|
| EV Batteries | China | 80%1 | World leader |
| Platinum | South Africa | 74%2 | World leader |
| Semiconductor Chips | Taiwan | 72%3 | World leader |
| Vaccine Supply | India | 70%4 | World leader |
| Rare Earth Elements | China | 69%5 | World leader |
| Memory Chips | South Korea | 61%6 | World leader |
| Software Development Outsourcing | India | 55%7 | World leader |
| Coffee | Brazil | 38%8 | World leader |
| Copper | Chile | 23%9 | World leader |
| Iron Ore | Brazil | 17%10 | 2nd largest producer |
As of January 2026.
For illustrative and discussion purposes only. The logos are registered trademarks of the companies that own them and are used for illustrative purposes only. The information provided is not a recommendation to purchase, sell, or hold any particular security and should not be construed as an endorsement of or affiliation with Franklin Templeton. It is neither indicative of any portfolio holdings at any one time nor reflective of current or future portfolio holdings.
Many emerging markets expected to outgrow developed markets
*G7 composed of 7 countries: Canada, France, Germany, Italy, Japan, UK, and US. There is no assurance that any projection, estimate or forecast will be realised. Source: IMF, WEO. IMF estimates as of 31 October 2025.
Emerging markets are back – as tailwinds align. Are you ready?
After years of US mega-cap dominance, a powerful rotation is underway. Emerging markets are not only back in favor, they are setting the pace.
A turning point for global leadership
Changing global dynamics and US fiscal and political factors are affecting the US risk premium and challenging outdated EM risk.
EMs are no longer emerging, they are leading
EMs are the global growth engine, leading the next cycle in digitalization, disruptive technology and sustainability.
US dollar weakness creates a powerful tailwind
A softer US dollar supports EMs by lowering borrowing costs and boosting local demand.
Why Franklin Templeton?
Our local presence drives alpha
Investing in emerging markets demands deep local insight, disciplined research, and a range of solutions that meet different client needs. Our platform brings all three together — across active equities and emerging markets debt— giving investors flexible ways to express their views and capture opportunity.
With 100+ investment professionals across 17 countries, our teams are embedded directly in local markets, uncovering companies and trends often overlooked by global benchmarks. Their insights feed into a research platform covering 1,200+ companies globally, combining local access with global perspective.
Our active equity portfolios are built around our highest‑conviction ideas — not consensus views — with high active share, a focus on quality, and a consistent valuation framework.
Alongside this, our robust emerging markets debt capability offers a complementary way to access the asset class, whether investors prefer targeted exposures or diversified building‑block solutions.
With more than US$70bn in emerging markets equity AUM and a proven record across the capital structure, we are a trusted partner for clients seeking emerging‑market opportunities.
Explore our range of emerging markets solutions
Franklin Templeton offers one of the broadest emerging-market ranges in the industry — spanning global, regional and single-country strategies, plus small-cap and frontier capabilities. Our solutions are designed to provide dedicated EM exposure that is tailored to the unique requirements.
65%
of global GDP growth – and growing
29%
of the holdings in our core portfolio are not found within the portfolios of our major peers.*
More than 3,000
stocks in the emerging market equity universe mean that managers need scale and depth of research to uncover all the opportunities.
9%
emerging markets are typically 9% of global indices, but 40% of global economy.
Global, regional and single country emerging markets
Our core emerging markets equity portfolios avoid style biases so perform across different market environments. These suit investors seeking a single emerging markets solution, or multi-manager investors needing a complement to style-tilted peers.
Templeton Emerging Markets Fund
- The fund seeks long‑term capital appreciation by investing primarily in equities of companies in emerging markets.
- The research team combines over 43 years of investment experience with in‑depth company research and local presence in regional offices worldwide.
Franklin FTSE India Index ETF – FID
- Seeks to replicate, to the extent reasonably possible before fees and expenses, the performance of the FTSE India RIC Capped Index, or any successor thereto, by investing all or substantially all of its assets in the U.S. listed, Franklin FTSE India ETF.
- Provides targeted exposure to large‑ and mid‑sized companies in India at only 19 bps in management fee.
Franklin Emerging Markets Equity Index ETF – FLEM
- Seeks to replicate, to the extent possible and before fees and expenses, the performance of the Solactive GBS Emerging Markets Large & Mid Cap CAD Index‑NR. It invests primarily in equity securities in emerging markets.
- Provides targeted exposure to large and mid‑sized companies in Emerging Markets.
Emerging markets: six things to consider
Every decision starts with the right questions. These six can help you frame your view of emerging markets
1. Growth drivers - Where is the real growth coming from?
2. Valuation & dispersion - Are valuations telling the full story?
Beneath the headline index, valuations vary sharply across countries, sectors and companies. This dispersion creates fertile ground for active stock selection.
3. Concentration - Does EM exposure mean “China exposure”?
China remains a key part of the EM opportunity set — but today’s EM universe is far more balanced, with rising influence from India, Taiwan, Korea and a growing cohort of frontier markets.
4. Implementation - Global EM? Regional?
Building EM exposure isn’t one-size-fits-all. Blending global strategies with regional or thematic allocations can help target specific drivers of return and risk.
5. Macro - How much do politics, policy and currency matter?
Macro can be noisy — but earnings, governance and structural trends tend to drive long-term returns more than short-term headlines. Still, understanding fiscal strength, reserves, and policy trends helps set expectations.
6. Currency - Is EM currency risk a bug or a feature?
Currency movements can enhance or detract from returns — but in a multi-polar world with shifting capital flows, EM FX exposure may play a growing role in diversification.
Emerging markets insights
FAQ: Investing in emerging markets
Emerging markets are economies undergoing structural transformation — typically growing faster than developed markets and playing a larger role in global supply chains, consumption and innovation. Today’s EM universe spans 24 countries across Asia, Latin America, EMEA and the Middle East. These markets now account for a rising share of global GDP growth and are home to leading companies in sectors such as semiconductors, digital services and advanced manufacturing.
According to long-term IMF forecasts, emerging economies are expected to grow at materially faster rates than developed markets, supported by demographics, rising incomes and secular trends such as digital adoption and premiumization. At the same time, many EM equities continue to trade at attractive valuations relative to developed peers. For diversified portfolios, this combination of higher structural growth and compelling entry points can open opportunities over a long-term horizon.
Emerging markets come with distinct risks: policy shifts, currency volatility, geopolitical events and liquidity differences can all contribute to uncertainty. But risks are far from uniform. Many EM economies have strengthened their fiscal positions, expanded FX reserves and improved institutional frameworks over the past decade, making the overall landscape more resilient than historic perceptions suggest.
The choice between active and passive EM exposure depends on an investor’s objectives, cost preferences and approach to navigating these dynamics.
Today’s EM opportunity extends well beyond commodities. “New economy” sectors — semiconductors, digital platforms, online/offline consumer franchises, healthcare innovators and technology-enabled financial services — now account for more than half of the EM index. These sectors reflect the transition toward higher-quality, innovation-led growth.
China remains influential, but the EM universe is far more diverse than a single market. Countries such as India, Taiwan, South Korea, Brazil, Mexico and a growing cohort of frontier markets contribute substantially to earnings, innovation and long-term growth. This makes today’s EM landscape more balanced and multi-polar than many investors assume.
Currency movements can amplify or reduce returns in the short term. FX dynamics in EM are increasingly influenced by domestic fundamentals, interest-rate cycles and evolving global trade patterns. Over the long term, however, company earnings, governance and structural growth drivers tend to play a more significant role in return outcomes. Some investors view selective currency exposure as an additional source of diversification.
EM strategies may suit investors seeking long-term capital growth, broader geographic diversification, or exposure to innovation-rich sectors. They can also complement existing allocations — whether active or passive — within a multi-manager or model-portfolio framework.
The investment case extends beyond pure valuation metrics. EM companies increasingly operate at the cutting edge of high-growth industries including artificial intelligence, electrification of transportation, and digital payments. These structural advantages, combined with attractive demographics and technological innovation, provide clear pathways to higher earnings growth. For long-term institutional investors, purchasing these growth franchises at current valuations offers asymmetric return potential—the opportunity to benefit from both earnings growth and multiple expansion as the market rerates these businesses over time.
Emerging markets possess several structural advantages that make them compelling for long-term institutional allocations. Demographically, EMs benefit from large, youthful populations and rising urban consumption, positioning them not just as producers but as future engines of global demand. This demographic dividend supports sustained economic growth and creates expanding consumer markets that multinational corporations increasingly prioritize for investment and production.