Emerging markets are navigating a turbulent landscape shaped by US tariffs and the economic aftershocks of the war in Iran, yet beneath the volatility lie significant investment opportunities that many investors have overlooked, according to Charles Jillings, co-fund manager of the Utilico Emerging Markets Trust (UEM). In a forthcoming episode of the MoneyWeek Talks podcast, Jillings outlines why countries such as Brazil and the Philippines remain underappreciated, even as global headwinds batter broader emerging-market indexes.
Market outlook: resilience amid tariff turmoil and geopolitical shocks
The Utilico Emerging Markets Trust, a UK-listed investment trust managed by ICM Investment Management Limited and ICM Limited, focuses on infrastructure and utilities in developing nations. Jillings and his co-manager Jacqueline Broers take a bullish view on emerging markets heading into 2026, citing expectations of lower interest rates, higher commodity prices and attractively low valuations. However, the near-term picture is complicated by two major forces: the trade policies of Donald Trump and the fallout from the conflict in Iran.
Tariffs have created widespread investment uncertainty and disrupted trade flows across emerging economies. Countries with high currency beta — such as South Africa and Brazil — have seen pronounced equity market volatility in response to US trade announcements, while others, notably India, have proved more insulated. The trust has responded by reducing its exposure to Mexico amid what Jillings describes as “tariff turmoil”. Despite this, the managers believe investment in essential infrastructure will continue regardless of trade disputes, given the structural drivers of urbanisation, decarbonisation and digital adoption.
The war in Iran has added a further layer of economic strain. The International Monetary Fund (IMF) warns that emerging economies are now at greater risk of interest rate hikes and currency shocks because of their increased reliance on market investors such as hedge funds, which can withdraw capital rapidly. Inflation, fiscal pressures and trade disruptions have mounted, prompting the IMF to lower growth projections for emerging and developing economies. Some commodity producers, including Brazil, have benefited from higher oil prices, but many others face currency depreciation and rising borrowing costs.
Over the longer term, the trust’s strategy of investing in essential service providers — energy and transport operators, water companies and digital infrastructure firms — positions it to capture structural megatrends. UEM has a 20-year track record and has outperformed the MSCI Emerging Markets Index consistently, delivering a net asset value (NAV) total return of 60.8% over the past five years, more than double the index’s 25.6%. It has also raised its dividend for ten consecutive years, with over 80% of portfolio companies paying dividends. The trust has recently traded at a discount to NAV, prompting the board to implement a buyback programme to enhance shareholder value. Activist investor Saba Capital has also built a nearly 6% stake in the trust.
Overlooked markets: why Brazil and the Philippines deserve attention
Jillings highlights Brazil and the Philippines as two of the most overlooked markets within the emerging-world universe, each offering distinct infrastructure-led investment opportunities that extend well beyond mainstream commodity or consumer stories.
Brazil accounts for roughly 22% of UEM’s portfolio, a significant concentration that reflects the country’s deep infrastructure needs and regulatory progress. The trust holds Orizon, a waste management company that operates sanitary landfill sites capable of generating carbon credits. But the broader opportunity is vast. Brazil’s water and sanitation sector alone represents a BRL 550 billion investment opportunity by 2033, driven by a regulatory overhaul aimed at achieving universal access. The electricity sector is expected to see more than $100 billion in investment by 2029, with the country’s already clean electricity matrix positioning it strongly for the energy transition. Higher oil prices linked to the Iran conflict have provided a short-term economic cushion, but the long-term case rests on structural reforms and the need for social infrastructure as the middle class expands.
The Philippines, by contrast, is riding a wave of government-led infrastructure spending and private-sector enthusiasm. The government has allocated approximately USD 26 billion to infrastructure in 2025, with sectors including transportation, green projects and digital infrastructure now open to 100% foreign ownership. Under new public-private partnership (PPP) legislation, private capital is pouring in: as of December 2025, ₱2.81 trillion ($47.4 billion) in projects were committed or underway. Digital infrastructure — data centres, cloud services and energy — is growing rapidly, while transportation improvements are strengthening trade connectivity. UEM’s exposure includes International Container Terminal Services (ICT), a ports operator that stands to benefit from shifting trade patterns and the Philippines’ strategic location.
Both countries exemplify a broader theme: emerging markets are significantly undervalued and underrepresented in investor portfolios, yet they are supported by global infrastructure megatrends that the World Bank estimates will see emerging and developing economies contribute over 60% of global GDP growth in the next decade. The annual opportunity in infrastructure and real assets across emerging and frontier markets stands at USD 920 billion, spanning digital connectivity, renewable energy, grid modernisation, water systems and transport hubs. Jillings notes that Vietnam is another exciting market, though it presents its own set of challenges for investors.
Risks remain, including regulatory instability — though this is improving in regions such as Brazil’s water sector — and currency sensitivity to global events. The IMF has also flagged the growing flow of stablecoins into emerging economies, warning of vulnerability to cryptocurrency market fluctuations. For UEM, the persistent discount to NAV is a key concern, but the trust’s focus on essential services and long-term megatrends provides a differentiated proposition compared with broader emerging-market funds.
Listen to the full discussion on MoneyWeek Talks
The conversation with Charles Jillings is featured in the latest episode of MoneyWeek Talks, a podcast that helps listeners unlock the secrets to financial success. Hosted by editors Kalpana Fitzpatrick and Andrew Van Sickle, the show features influential guests including CEOs, entrepreneurs, economists and policymakers, sharing their top tips on managing money, investing wisely and building wealth. Subscribers can access the full interview, in which Jillings discusses the impact of tariffs and the Iran war, the case for Brazil and the Philippines, and the long-term investment opportunities in infrastructure and utilities. To listen, subscribe to the MoneyWeek Talks podcast and get ready to make it, keep it and spend it with confidence.
