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Emerging Markets in 2015: Another Very Bad Year

Morningstar does not advocate dumping asset classes when times are tough. But it might be helpful to dig into what’s been happening during the past few year.

Patricia Oey 23 February, 2016 | 11:25
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Investors may be tempted give up on their emerging markets equity funds, as many of them have been down for three consecutive calendar years while U.S. markets have been strong. On average, emerging markets funds have declined 5.7% annualized during the past three years, compared with the S&P 500’s 15.1% return during the same period.

Morningstar does not advocate dumping asset classes when times are tough. But it might be helpful to dig into what’s been happening during the past few years to get a better understanding of the complicated dynamics that drive the performance of emerging markets funds.

Emerging Markets: A Diverse Asset Class
“Emerging markets” is a blanket term. The group is made up of about 20 countries, each with its own distinct policies, currencies, economic orientation, and companies. So while emerging-markets funds have been declining during the past three years, there have been large performance differences among the individual markets.

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About Author

Patricia Oey  Patricia Oey is an ETF analyst at Morningstar.

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