The MSCI Emerging Markets index is trading on a price/book ratio of 1.5x, and investors have never had negative returns when investing at these levels in the short run, he says.
He adds that with the index being cyclical, now is a good time to buy.
"It’s a cyclical asset class prone to emotion," he said. "But 80 per cent of the time, even with specific countries, you will make money when book value is below -1.5x."
Eidelman (pictured) joined Austin Forey as co-manager on the £1.1bn fund in January of this year; Forey has been running it since July 1997.
Data from FE Analytics shows that the fund has performed roughly in line with the MSCI Emerging Markets index over the past five years net of fees, making 25.45 per cent while the index has made 28.24 per cent.
Performance of fund vs index over 5yrs
Source: FE Analytics
It did, however, prove better at outperforming the index prior to the financial crisis, making 226.16 per cent in the five years up to this date in 2007 compared with the 205.33 per cent from the benchmark.
Performance of fund vs index Aug 2002 to 2007
Source: FE Analytics
Eidelman says that the asset class is better prepared to cope with the slowdown it is suffering than it was in prior crises, meaning that the outlook for recovery is brighter.
In particular, the effect of the currency crises that have sprung up in the wake of the Fed's talk of tapering and dollar strength should be more easily handled by most countries, thanks to the widespread utilisation of floating exchange rates, which was not the case in the 1990s.
"The point we would look to raise is the fact that currencies are flexible today, representing a shift from where we were in past crises," he said.
"Most currencies today are floating and so the adjustment which would have to happen has happened through the currencies."
The region has been suffering recently, partly thanks to over-inflated expectations that developed in response to the financial crisis, when investors looked to it to save world growth, ignoring the asset class’s own headwinds.
"Two years ago, people expected EM to be the growth engine of the world, so companies' earnings expectations got over-heated," Eidleman continued. "Earnings growth on a corporate level has been hit."
However, the manager says that cost-cutting has allowed companies to be relatively resilient.
The asset class is also suffering thanks to the emergence of inflation, which it had avoided until recently.
"Emerging markets have been going through a policy-induced slowdown. Certain markets faced inflation so banks raised rates and tried to slow things down."
"Coming from a situation where EM haven't had inflation, we have continued to see inflation pressures."
"Wage inflation has been an issue: in China it is up 20 per cent; in Indonesia, some companies have had to put wages up 30 per cent."
However, the manager says that things appear to have reached their nadir – at least judging by valuations, meaning that now is the time to play the recovery story.
"It’s particularly when things look the most dire that you should be looking at a particular asset class."
Looking at one-year returns after a certain price/book value is recorded, when the latter is below 1.5x, investors have never lost money, he says, although he acknowledges the range is high, with a return of 100 per cent the highest and 0 per cent the lowest.
A return of between roughly 45 and 75 per cent accounts for half the results, representing a very strong rebound.
However, he warns that China could be the fly in the ointment, and retains an underweight position in the country.
The MSCI China index has made just 4.74 per cent in three years, according to data from FE Analytics, and Eidelman says the structure of the economy could weigh on this in the future.
Performance of indices over 3yrs
Source: FE Analytics
"China has been the epicentre of what people have been concerned about in the asset class," he said. "In the 08/09 recovery, it was about stimulating the local government to invest."
"For the last 10 years, the Chinese government has been saying 'we want to move towards a consumption-led economy', but in 2008 and 2009 it had that hiatus, so the numbers you have seen for loans and credit in China have gone quite high."
"Fixed-asset investment [government sponsored] remains a large part of total contributors to economic growth."
Given the debt load, it is going to become harder for China to finance growth in this fashion and the rebalancing of its economy is going to be more difficult, Eidelman warns.
The country is also one of very few not to have a free-floating exchange rate to take the pressure off.
The manager says that the major negative contributor to his underperformance has been his overweight position in India, explaining that the team didn’t see the severity of the current crisis coming.
The issues are ultimately political, he says, underlining one of the major headwinds for investors in the asset class: the risk of policy mistakes.
JPM Emerging Markets is available with a minimum initial investment of £1,000 and has ongoing charges of 1.68 per cent.
In a recent FE Trustnet article, Artemis’ Simon Edelsten gave a counter argument on valuations.
