In response to the economic, ESG, and market consequences of Russia’s invasion of Ukraine, we made the decision to exit our dedicated Emerging Markets exposure across our mutual fund and UMA model portfolios on March 4th. Our direct exposure to Russia within our Emerging Markets strategies was always limited due to Russia’s minimal index weight and ESG concerns that predated the invasion.
We believe the invasion requires a rethink of the merits of including emerging markets as a standalone asset class in portfolios. This is particularly true for ESG integrated portfolios that prioritize data on human rights, civil liberties, stability, and peace. As the situation in Ukraine develops, there are still wide-ranging risks and many unknown second and third order effects that have yet to ripple through markets.
While this memo is normally reserved for our clients, we view it as a timely discussion amidst the larger constituency of our readership. Read the full rationale on Emerging Markets.