Navigating Emerging Markets Rebound: The Case for Calamos Evolving World Growth Fund

Harrison BrooksWednesday, Jun 25, 2025 12:28 am ET
20min read

Global capital flows are shifting. A confluence of factors—China's policy pivot toward economic stimulus, a weakening U.S. dollar, and rising European defense spending—is creating fertile ground for emerging markets. Among the funds positioned to capitalize on this inflection point is the Calamos Evolving World Growth Fund (CNWIX), which combines selective exposure to China's recovery with a thematic focus on secular growth drivers like technology and consumer discretionary. Let's dissect why this fund merits consideration in today's environment.

The Macro Backdrop: Capital Flows and China's Pivot

Emerging markets are experiencing a cyclical upswing. The U.S. dollar's multiyear decline has eased debt pressures for dollar-denominated borrowers, while China's easing of regulatory curbs and fiscal support for sectors like technology and infrastructure have reignited investor optimism. Meanwhile, Europe's defense spending—a secular trend tied to geopolitical tensions—is boosting demand for industrial and tech firms.

The Calamos fund's strategy aligns seamlessly with these dynamics. Its sector allocations (as of March 2025) emphasize Information Technology (23.2%) and Consumer Discretionary (22.8%), both above the MSCI Emerging Markets Index benchmarks. These sectors are critical to capturing growth in a world where digital transformation and consumer spending power dominate.

China Exposure, Managed with Precision

The fund's China holdings are a key differentiator. While its top 10 include major players like Alibaba (6.0% of assets) and Tencent (3.5%), the portfolio mitigates risk through instruments like convertible bonds—which represent 15.6% of the fund. This approach balances growth potential with downside protection, a necessity in China's volatile markets.

The fund's April 2025 commentary underscores a selective China strategy, favoring companies benefiting from policy tailwinds. For instance, Alibaba's convertible bonds (a top holding) provide exposure to China's e-commerce revival while offering bond-like protections. The fund's broader China exposure, via currencies (13.6% in CNY), further ties its performance to the region's recovery.


This comparison highlights the fund's resilience in 2024 (+14.99% vs. the index's +8.05%), showcasing its ability to outperform when emerging markets rebound.

Structural Tailwinds: USD Weakness and European Defense

The U.S. dollar's downtrend—driven by slowing U.S. growth and Fed policy shifts—has reduced the cost of investing in emerging markets. CNWIX's 29.5% USD exposure reflects its flexibility to capitalize on this, particularly through U.S.-listed equities with emerging market revenue streams.

Meanwhile, European defense spending is surging, with NATO allies pledging to increase military budgets. The fund's 11.0% allocation to Industrials (vs. 6.3% in the index) positions it to benefit from this trend. For example, holdings like Hanwha Aerospace (South Korea) and Meritz Financial Group (South Korea), which support defense and infrastructure projects, align with this theme.

Risk Considerations and Valuation

CNWIX isn't without risks. Its 136.7% portfolio turnover signals active management, which can amplify volatility. Additionally, its premium valuations—Price/Earnings of 17.4x vs. the index's 13.8x—reflect expectations of strong growth, leaving it vulnerable to earnings disappointments.

However, the fund's risk-managed instruments (convertibles, sector tilts) and focus on quality companies mitigate some downside. Its 5.60% trailing 12-month return, while below the MSCI benchmark, suggests it's still early in the rebound cycle.

Investment Thesis: A Timely Opportunity

The Calamos Evolving World Growth Fund is positioned to thrive in today's emerging markets rebound. Its thematic focus on technology, consumer discretionary, and industrials targets sectors with secular growth, while its selective China exposure and risk management tools reduce overexposure to volatility.

Investors seeking ex-U.S. growth in a weakening dollar environment should consider CNWIX. The fund's performance in 2024, paired with its strategic allocations, suggests it's well-equipped to capitalize on the inflection points in global capital flows and China's policy shift.

Actionable Takeaway:
For a portfolio needing exposure to emerging markets' cyclical upturn, CNWIX offers a balanced approach. Pair it with broader market ETFs (e.g., VWO) for diversification, and monitor the fund's currency allocations (especially USD/CNY) for shifts in regional risk appetite.

In a world of shifting tides, Calamos Evolving World Growth Fund sails toward the currents of growth—making it a compelling play for 2025 and beyond.