In the final quarter of 2025, the Nomura Systematic Emerging Markets Equity Fund (IPOIX) delivered a noteworthy performance, outpacing its benchmark, the MSCI Emerging Markets Index. This success was predominantly fueled by strategic investment choices within specific sectors and regions. The fund's overweight allocation to China proved particularly beneficial, driven by adept stock selection. Furthermore, astute stock picking in the real estate and financial sectors significantly contributed to its excess returns. The robust growth in digitalization and artificial intelligence has positioned leading-edge semiconductor manufacturers to capture increasing value, adding another layer of success to the fund's portfolio. With consensus expectations pointing towards double-digit earnings growth for emerging markets in 2026, IPOIX appears well-situated to continue its strong trajectory, potentially closing the earnings gap with developed markets for two consecutive years.

Nomura Systematic Emerging Markets Equity Fund Demonstrates Strong Q4 2025 Performance

In the fourth quarter of 2025, the Nomura Systematic Emerging Markets Equity Fund Institutional Class (IPOIX) achieved a significant milestone, outperforming its benchmark, the MSCI Emerging Markets Index. This notable success was predominantly driven by strategic investment decisions and favorable market conditions.

A key factor in IPOIX's superior performance was its overweight position in China. The fund's careful selection of Chinese equities yielded substantial returns, indicating a deep understanding of the market dynamics and a successful stock-picking strategy. Beyond China, the fund's expertise in stock selection within the real estate and financial sectors also played a crucial role, contributing significantly to the overall excess return.

During this period, the MSCI Emerging Markets Index (net) itself recorded a robust 4.7% return in US dollar terms, showcasing a continued leadership trend over its developed market counterparts. This broad market strength was underpinned by positive macroeconomic trends and favorable industry-specific dynamics across various regions. Notably, Latin America and the Europe, Middle East, and Africa (EMEA) regions demonstrated strong outperformance, further supporting the overall positive sentiment in emerging markets.

Looking ahead, companies at the forefront of advanced semiconductor manufacturing are poised for substantial growth. The escalating demand driven by digitalization and artificial intelligence applications suggests that these firms are well-positioned to capitalize on expanding market opportunities. This trend is expected to provide continued tailwinds for funds with exposure to this critical sector.

Analysts' consensus forecasts indicate a promising outlook for emerging markets, with expectations of double-digit earnings growth extending into 2026. This would mark the second consecutive year of significant earnings expansion, potentially narrowing the long-standing earnings disparity between emerging markets and the United States. This positive earnings trajectory, combined with ongoing improvements in macro fundamentals and governance reforms, creates a fertile ground for continued investment in strategies like IPOIX.

This performance highlights the strategic acumen of the fund managers and the intrinsic strengths of emerging markets, particularly in sectors experiencing rapid technological advancement and robust economic development. While geopolitical and trade risks persist, they are generally not expected to derail the long-term growth prospects. However, vigilance regarding sector-specific and country-specific volatility, especially in major markets like China and Korea, remains crucial for navigating these dynamic investment landscapes.

The impressive performance of the Nomura Systematic Emerging Markets Equity Fund in Q4 2025 offers valuable insights into the burgeoning potential of emerging markets. It underscores the importance of a well-researched, systematic approach to investment, particularly in dynamic regions where macroeconomic shifts and technological advancements can yield significant returns. For investors, this success story highlights that actively managed funds with a keen eye for regional and sectoral opportunities, such as those in China's robust economy and the burgeoning semiconductor industry, can consistently outperform benchmarks. The sustained growth forecasts for emerging markets in 2026 further reinforce the notion that these economies are not merely catching up but are becoming key drivers of global economic expansion. This emphasizes the need for investors to consider strategic allocations to emerging markets as part of a diversified portfolio, leveraging expert fund management to navigate complexities and capture growth.