The market has under-estimated the true performance of emerging tech stocks and it makes sense to pull back from the euphoria.

That is according to Vontobel’s Roger Merz, who co-manages the Vontobel Fund MTX Sust Emerging Markets Leaders fund with Thomas Schaffner.

The pair have dramtically reduced EM tech holdings from an 18% overweight in 2016 to a 3% overweight today, due to the rampant growth in the sector.

In this video, Merz discusses the challenge posed by passive funds for EM equity managers and which nations look set to either join or leave the EM benchmark in the near-term.