Should Investors Underweight Emerging Markets Equities Today?
No. Emerging markets equities face a challenging macroeconomic environment, but many of the same issues are also plaguing their developed markets peers.
Emerging/Frontier
Emerging Markets Equities: It’s Not All About the Fed
The Federal Reserve is poised to continue lifting interest rates this year. Many investors tend to view tightening Fed policy as a headwind for emerging markets (EM) equity performance and may be tempted to dial back exposure to the bloc, but market history is an inconsistent guide when gauging how EM equities will perform when the Fed raises rates. In this paper, we outline several reasons EM exposures could prove to be diversifying as the current cycle plays out.
Decades of Data: Emerging Markets 1987–2021
The 2021 Emerging Markets edition of our annual report on the history of financial markets provides context for the range of returns investors can expect from equities, bonds, and cash; reveals the importance of various components of equity returns; examines the evidence for equity mean reversion; and reviews the relationship between initial valuations and subsequent returns for equities and bonds.
Don’t Expect EM ex China Performance to Impress
Emerging markets ex China equities have underperformed their DM peers this year due, in part, to greater economic and political challenges, which have weighed on sentiment toward the bloc. We expect these issues to persist into next year and are skeptical that EM ex China equities can outperform DM equivalents.
Decades of Data: Emerging Markets 1987–2020
The 2020 Emerging Markets edition of our annual report on the history of financial markets provides context for the range of returns investors can expect from equities, bonds, and cash; reveals the importance of various components of equity returns; examines the evidence for equity mean reversion; and reviews the relationship between initial valuations and subsequent returns for equities and bonds. It also analyzes the historic economic declines and sharp asset price movements that resulted from the COVID-19 pandemic in 2020.
Emerging Markets Equity Manager Performance: 2020
Slightly more than half of active emerging markets equity managers underperformed the MSCI Emerging Markets Index (gross of fees) in 2020—the fourth time the median manager has underperformed the benchmark out of the last five years. This chart book is our annual summary of the absolute and relative performance of managers that report to our database.
Decades of Data: 1900–2019
As the current market environment continues to rapidly evolve, we remind investors that reviewing the history of business cycles, returns, and valuations can help provide a framework for understanding the market today. Our 2019 edition of Decades of Data presents historical analysis on economic indicators, equity, fixed income, and cash markets across eight geographies over the very long term.
Emerging Markets Equity Manager Performance
Of active emerging markets equity managers, 64% outperformed the MSCI Emerging Markets Index gross of fees in 2019 after three consecutive years of underperformance. This is a companion piece to the US, Global, and Global ex US charts books already published.
US Manager Universe Statistics: Fourth Quarter 2019
This publication presents manager performance for 37 asset classes and substrategies, showing the median, mean, and key percentiles of return. Relevant indexes for each asset class are also included to provide market context.
US Manager Universe Statistics: Third Quarter 2019
This publication presents manager performance for 37 asset classes and substrategies, showing the median, mean, and key percentiles of return. Relevant indexes for each asset class are also included to provide market context.