9 JANUARY 2026
Allocation Views: AI, earnings and the case for staying risk-on
Amid steady economic growth and healthy corporate fundamentals, Franklin Templeton Investment Solutions sees reasons to prefer equities over fixed income as 2026 begins.
A Growth Story
Did you know that the emerging market economies make up more than half of the world's GDP?
Emerging economies are growing faster than the developed world. In 1980, emerging markets made up 37% of the world's global Gross Domestic Product (GDP). Today, this figure has risen to more than 60%. Although the International Monetary Fund currently expects an unprecedented decline in global GDP growth due to Covid-19, the emerging market economy will most likely be hit less. For 2021, the estimated growth for the emerging markets is almost 50% higher than for developed markets.
Gross Domestic Product growth estimate for 2021.
A growing economy means more jobs, wealthier consumers, and higher sales for companies’ products and services. That means a more stable economic system for your investments, more diversified opportunities, and greater potential for growth.
For illustrative and discussion purposes only.
Source: International Monetary Fund, World Economic Outlook Database, April 2020. Due to the high level of uncertainty in current global economic conditions, the April WEO database provides only projections for GDP data through 2021.
Leading in technology innovation
Did you know that 66% of emerging markets' research and development (R&D) spending comes from the information technology sector?
Emerging markets aren’t playing catch-up with developed markets — they are forging ahead. Innovators are leading the way in new and advanced technologies and are presenting investors with often untapped growth potential. In 2019, 66% of R&D spending in emerging markets came from the IT sector, compared to only 18% in developed markets.
E-commerce, digital payments, mobile banking, and electric cars are just some of the areas where several emerging markets have left the developed world behind. With R&D spending in the information technology sector at record levels, it’s the innovators with their sights set on the future who are driving emerging market growth.
For illustrative and discussion purposes only.
Source: MSCI, Factset. April 2020. MSCI makes no warranties and shall have no liability with respect to any MSCI data reproduced herein. No further redistribution or use is permitted. This report is not prepared or endorsed by MSCI. ©FactSet Research Systems Inc. All Rights Reserved. See www.franklintempletondatasources.com for additional data provider information. Holdings are subject to change.
More Resilient than You Think
Did you know that more than half of emerging markets' exports are to other emerging economies?
Independence and resilience – these are the qualities that could allow emerging markets to continue to grow and, importantly, for that growth to be sustainable. In 2000, only a third of goods exported from the emerging markets made their way to other emerging markets. In today’s emerging world, demand is higher and 56% of exports are intra-emerging market trades.
Why does this matter? Because emerging markets are no longer as vulnerable to external shocks from the developed countries. They no longer feel the ripples from them as much as they once did, whether that be a reduction in trade, a strong US dollar or a fall in commodity prices.
For illustrative and discussion purposes only.
Source: International Monetary Fund, Direction of Trade Statistics, April 2020.
How Can I Invest?
Seize the potential of emerging market growth and innovation today. We offer a full range of equity, fixed-income, and multi-asset funds. Selected funds are listed below.
View All Emerging Markets Investment Funds
Templeton Emerging Markets Sustainability Fund*
Emerging Markets Equity Fund investing in companies aligned to positive social and environmental outcomes linked to UN SDGs.
Templeton Emerging Markets Fund*
Equity fund with over three decades of high conviction investing in global emerging market companies.
Templeton China Fund*
Equity fund that invests in fundamentally strong companies based in China, Hong Kong or Taiwan.
*Sub-funds of Franklin Templeton Investment Funds, a Luxembourg-registered SICAV (“FTIF”)
Explore our expertise
Global resources, a local presence and a strong track record.
Franklin Templeton is a pioneer in the emerging markets with experience on the ground since the first emerging market mutual fund was launched in 1987.
We focus on how we can deliver your investment goals. We do this by discovering the emerging market growth stories that drive these exciting and innovative economies.
19
Offices globally
30+
Years track record in emerging markets
80+
Investment professionals
For illustrative and discussion purposes only. Source: Franklin Templeton, September 2020.
