Momentum sees EM equity gains increasingly concentrated as top 10 nears 40% of index
EEM•Valuation risk and preference for active management
The firm said richer EM tech valuations raise downside risk to the broader index if the AI-semiconductor cycle weakens.
Momentum favored active management for diversification.
AI and semiconductor leaders drive a larger share of the index
Momentum said the five largest stocks account for about 33% of total EM market capitalization, driven by AI and semiconductor leaders in South Korea and Taiwan.
It said passive EM exposure faces higher single-stock, sector and country risk as index weights shift toward South Korea and Taiwan, away from China.
Momentum warns on rising concentration in emerging-markets equities
Momentum Global Investment Management flagged rising concentration risk in emerging-markets equities despite about 20% year-to-date gains through end-July 2026.
The firm said the top 10 constituents now sit near 40% of the EM index, up from about 21% a decade ago.
