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What Should You Do With Your Emerging-Markets Fund?

Stay put, but make sure your fund does not have an outsized China exposure.

Patricia Oey 15 March, 2016 | 16:30
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Investors may be tempted to give up on their emerging-markets equities 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, over the past three years through Dec. 31, 2015, compared with the S&P 500’s 15.1% annualized return over the same period (thanks to a 32% return in 2013 and a 14% return in 2014, which helped offset a weak 1.4% return in 2015).

Generally speaking, it is not a good idea to dump an asset class when times are tough. But it might be helpful to dig into what’s been happening over the past few years, to get a better understanding of the complicated dynamics that drive the performance of emerging-markets funds.

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About Author

Patricia Oey  Patricia Oey is an ETF analyst at Morningstar.

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