Emerging market stocks are “taking the brunt of investors’ fears,” writes Nir Kaissar in a Bloomberg article last month, noting a drop in the MSCI Emerging Markets Index on a year-to-date basis against S&P 500 gains.

Bloomberg conducted a survey of 20 investors, traders and strategists regarding what they think are the biggest drivers for EM. The top responses included: Fed rate outlook, trade conflicts, EM central bank outlook, China, oil and commodity prices, and local politics. “Many of those risks,” writes Kaissar, “also threaten the U.S., of course, but investors insist that U.S. companies are shielded by strong fundamentals. If that’s true, then emerging-market companies have as little to fear.” He notes that profits in developing countries “rival those in the U.S.”

Kaissar points out that U.S. companies are showing a higher return on investment than those in emerging markets, “but that’s only because U.S. firms are more levered.” The price of the EM index, he writes, “would have to increase 125 percent to reach a P/E of 33, compared with just a 12 percent gain for the S&P 500.” This, Kaissar concludes, suggests better potential payoffs in EM stocks. “Emerging markets appear to be taking the risks swirling around them more seriously than those in the U.S.,” he concludes, “and that could make all the different for investors.”