The BNY Mellon Global Emerging Markets Fund's performance in the third quarter of 2025 indicated a divergence from its benchmark, the MSCI Emerging Markets Index. The primary factors contributing to this underperformance were identified within specific sector stock selections. Despite an overall overweighting in the consumer discretionary sector, individual stock choices within this area, alongside the materials sector, negatively impacted the fund's relative returns. Conversely, positive contributions from the industrials sector and certain key holdings helped to partially offset these detractors.
A detailed examination of individual holdings reveals that Contemporary Amperex Technology, a prominent Chinese battery manufacturer, positively influenced the fund's results. However, other significant investments, specifically MercadoLibre and Tata Consultancy Services, acted as drag on performance. This highlights the complex interplay of sector allocation and individual company performance in determining overall fund returns within the dynamic emerging markets landscape.
Looking ahead, the fund management expresses a favorable view on emerging-market equities, asserting that they present compelling value propositions compared to developed markets. This perspective is rooted in the belief that these markets are currently trading at significant discounts, offering attractive long-term growth prospects. The investment strategy emphasizes identifying companies with robust fundamentals, including strong revenue growth, healthy free cash flow generation, and high return on invested capital (ROIC). This approach aims to capitalize on enduring structural trends, such as advancements in artificial intelligence and the potential for lower interest rates, positioning the fund for future growth and outperformance.
The investment in emerging markets is a testament to embracing global opportunities and fostering economic growth in diverse regions. By meticulously selecting companies with strong financial health and aligning with future-proof trends, investors can contribute to and benefit from the positive development of these dynamic economies.
