Portfolio managers at Vanguard, VanEck and BlackRock argue that despite the Iran‑related war driving oil to record highs, emerging markets retain upside. The MSCI Emerging Markets index posted a 34% gain in 2025, its best annual performance since 2017, while developed markets lagged. Investors have recently shifted to safety, but the rally remains notable given the broader shift in commodity prices.

Emerging equities still trade at roughly a 40% discount to their developed‑market peers on a forward price‑to‑earnings multiple, MSCI data show. The gap stems from years of dollar‑driven U.S. asset preference, yet falling interest rates and cooling inflation across many developing economies are narrowing it. Real rates have turned positive, encouraging capital inflows and local bonds and equities, as well.

BlackRock’s Emily Fletcher notes that rate cuts are already feeding economic acceleration in several frontier markets, still early in the cycle. Commodity‑rich nations stand to benefit from sustained oil premiums, reinforcing the case made before the conflict erupted. Investors seeking yield and diversification therefore find a compelling valuation edge in emerging markets today for global portfolios seeking stable returns now.