However, if one factors in economic upheavals the overall picture looks different. Jonathan Anderson, UBS’s chief Asia-Pacific economist, found that over the last 25 years emerging market equities have outperformed developed ones when emerging countries grew faster and underperformed when the reverse occurred. Investors should note that 25 years is a relatively short time to be drawing a conclusion from. [8 Top ETFs Since the Market’s Low.]
The takeaway here might be two things: one, don’t always assume that certain high-growth areas will always continue to be so high-growth. Protect yourself with a strategy, such as the 200-day moving average, and incorporate a stop-loss for the rough times. Two, understand the risks of emerging markets. They’re high-growth nations, sure, but in exchange for that is greater risk. [How to Follow Trends.]
For more information on the emerging markets, visit our emerging markets category.
- Vanguard Emerging Markets ETF (NYSEArca: VWO)
- iShares MSCI Emerging Markets Index (NYSEArca: EEM)
For full disclosure, Tom Lydon’s clients own shares of EEM.