Notwithstanding the recent market wobbles driven by uncertainty over the AI trade, emerging markets investment trusts have been enjoying a period of stellar performance.
The average investment trust in the IT Global Emerging Markets sector has returned 44% over the 12 months to the end of September 2026, compared to 17% for the average investment trust.
Over the last five years, the IT Global Emerging Markets sector has returned 72% and 193% over ten years, compared to 29% and 150% respectively for the average investment trust.
Those figures should remind investors spooked by the recent sell-off why investing is for the long term, and not to make any rash decisions.
So why the outperformance in emerging markets? Certainly, Donald Trump’s policies pushing down the value of the dollar have been a boon for emerging markets, where many countries have dollar-denominated debt.
Conversely, while Trump’s tariffs have hit some markets hard, the impact has not been as severe as anticipated, and performance has largely soldiered on apace.
More importantly, emerging markets have moved on from simply manufacturing cheap goods for the West and are now world-leading hubs of research and innovation.
Many are big energy exporters and several emerging markets, particularly in Asia, are home to leaders producing components for the AI hardware boom, leading to a recent explosion of outperformance from many trusts.
Little wonder then that intermediaries in a recent survey by Research in Finance showed enthusiasm for emerging markets. The survey revealed that 44% of advisers and discretionary fund managers expected emerging markets to be one of the top three performing sectors over the next 12 months.
Given such a bullish outlook, I asked my adviser network for their favourite emerging markets investment trust picks.
Jason Hollands, managing director of Bestinvest, the investment platform, recommended Templeton Emerging Markets Investment Trust and Ashoka WhiteOak Emerging Markets Trust.
He said: “Templeton Emerging Markets Investment Trust is a big and long-established fund and one of the top emerging markets picks on Bestinvest’s Best Funds List.
“Its 87-stock portfolio is actively managed, but investors should be clear about what they are buying: around half the portfolio is currently in technology, with three semiconductor giants – TSMC, Samsung Electronics and SK Hynix – collectively accounting for about 36% of assets. That concentration has helped the trust ride the AI-fuelled semiconductor boom, but it also means the portfolio is exposed to potential setbacks in the chip sector and those companies if the AI bull market falters.”
Hollands was also enthusiastic about Ashoka WhiteOak Emerging Markets, a smaller trust with total assets of £75m. He said: “Its portfolio is highly diversified across 199 positions. Although it isn’t currently on Bestinvest’s Best Funds List its much larger £3.1bn sibling OEIC fund is, so we are confident in the quality of the team and its stock selection process.”
It is worth highlighting the charging structure on Ashoka Whiteoak, which is unusual as there is no base management fee. Instead, as Hollands explained: “The manager can earn a performance fee of 30% of returns above the MSCI Emerging Markets Index over discrete three-year periods, subject to a cap of 12% of time-weighted average adjusted assets, with the fee delivered in shares. That is not the same as having no costs: the AIC reports an ongoing charge of 1.7% for the year to 31 March 2026 – but the structure does align the management team heavily with the interests of shareholders.”
As Hollands pointed out, manager Prashant Khemka is the largest shareholder with almost 18% of voting rights, so has significant skin in the game when it comes to delivering returns.
The tech concentration that Hollands alluded to is not unique to Templeton. Indeed, it is arguably more pronounced in Fidelity Emerging Markets, a trust that was recommended by three out of the four advisers I spoke to and that has gained around 52% over the past 12 months.
Nevertheless, Tom Milford, an analyst at Crossing Point, the investment manager, believes the AI boom has further to run and has two suggestions to capitalise on it. He said: “We favour Fidelity Emerging Markets and Templeton Emerging Markets, which take distinct approaches to capturing this potential.
“Fidelity Emerging Markets offers exposure to technology and semiconductor leaders in Taiwan and South Korea, alongside mining and industrial businesses positioned to benefit from infrastructure spending and the energy transition.”
But he emphasised that Fidelity is complemented by Templeton’s broader portfolio.
He said: “Templeton Emerging Markets Investment Trust takes a more traditional, research-led approach, focusing on quality businesses with sustainable earnings potentially trading below their estimated intrinsic value. Alongside leading semiconductor companies, its holdings in financials, consumer businesses and industrials provide exposure to broader emerging market opportunities.”
Paul Chilver, director and financial planning manager at Birkett Long, the financial adviser, said: “Emerging market investment trusts had a very strong 2025 partly due to a weakening dollar and this has continued in 2026.”
Paul suggests trusts that may take advantage of this include Mobius Investment Trust. He said: “China makes up a very small part, and the managers tend to run a concentrated portfolio that looks for opportunities in the small and mid-cap part of the market, therefore not one for the faint-hearted but has had excellent performance in the short term.”
Paul also recommended Fidelity Emerging Markets. “It should make a good companion to Mobius with greater exposure to large cap and the geographical exposure is very different, providing more exposure to China.”
Tom Poynton of Baron & Grant, a specialist in managing investment trust-focused portfolios, recommended JPMorgan Emerging Markets Dividend Income and Fidelity Emerging Markets. Tom says that Fidelity’s exposure to the AI trade and ability to short stocks has paid off and added to returns, even in a rising market.
The second pick is deliberately different, JP Morgan Emerging Markets Dividend Income. Poynton said: “It targets companies with sustainable earnings, strong governance and a commitment to returning capital to shareholders, which in emerging markets is often a sign of quality. The result is a portfolio that is cheaper than the index on forward earnings, yet more profitable.
“The trust has outperformed the MSCI Emerging Markets Index over one, three, five and ten years, and has maintained or grown its dividend every year since launch in 2010.
“With index returns increasingly concentrated in a handful of AI-related technology names, we also welcome the managers' willingness to trim technology on valuation grounds.”
As you can see, your choice of emerging market trust may be strongly influenced by how much faith you have in the AI trade, with several trusts having a big weighting to tech and AI related companies.
Personally, I think it’s impossible to call, but I am old enough to remember that some of the biggest gains tend to come in the last few years of a bull run. Alan Greenspan famously cited “irrational exuberance” in the US stock market in December 1996, yet the Nasdaq rose by around 280% after that before crashing in March 2000, arguably making it worth staying invested.
Remember, though, that investing in equities is for the long term, so be prepared to sit it out for a few years if markets reset, as they are bound to do at some point. If in doubt, seek advice from an independent financial adviser.
Annabel Brodie-Smith is communications director at the Association of Investment Companies. The views expressed above should not be taken as investment advice.