Countries don’t have to be great to see significant market growth, according to Research Affiliates’ CEO Rob Arnott as explained in a recent Investment News article.

In fact, the article says, since Arnott first recommended emerging markets in January, the “average diversified markets fund has gained 7.8%, and 17.8% since the February low.” He believes the asset class offers “an unusual three-way combination of low valuations, depressed currencies and strong momentum.” Here’s how:

• Low valuations: Arnott uses the Shiller PE ratio (which uses 10-year historical inflation-adjusted earnings) as a basis for his argument and says that, by that measure, emerging markets “were trading at 11.2 times earnings, below the 13 times earnings during the 2008 financial crisis.” At that level, the article says, Arnott foresees a 7.5% return over the next ten years.
• Depressed currencies: “An unusually strong dollar means unusually depressed emerging-markets’ currencies,” which, according to Arnott, are now about 19% cheaper than the U.S. dollar.
• Momentum: While chasing performance is normally a losing tactic, Arnott asserts that “following trends—which has a sell discipline—can be a successful tactic.”

“Given recent price and economic momentum,” says Arnott, “we are reasonably confident the bear market in EM assets—five years long for EM equities and currencies, and three years long for EM local currency bonds—came to an end in January 2016, and the early stages of a bull market look to be well underway.”