The S&P 500 Index has continued a relentless climb upward, leaving most other markets in its dust. Putting the S&P’s secular rally in context, it was touching 666 on March 6, 2009, and settling in the mid-2,300s as of mid-April 2017, more than eight years later.(1) That’s a 241% cumulative return—304% with reinvested dividends.

Seeing data like this makes us all think about one thing: how we wish we’d have had the fortitude to put more money to work in U.S. equities in March 2009.

Emerging Markets—Where Many Investors Have Feared to Tread

After tough returns in the 2013, 2014 and 2015 calendar years, many clients abandoned emerging market equity exposure. This reminds us of the old maxim: money managers are compared to three benchmarks—the S&P 500, cash and the client’s next door neighbor’s returns—and you had better be beating whichever one is doing best when it comes time for the client meeting.

Catalyst One: Valuation Relative to Other Equity Markets

It isn’t enough to simply say emerging markets are cheaper than the U.S. because by the very nature of their being more risky than U.S. equities they are supposed to appear less expensive. The real question is how much less expensive they need to be to pose a compelling opportunity

We noticed the following: