The emerging markets have been one of the bigger disappointments in terms of performance over the last few years, but there are pockets of opportunity, with some regions displaying fewer imbalances than others.

As I look at 2014, four months in, I find it important to break emerging market equities into different pieces. This isn’t all that different from what people do in the United States, recognizing that to have a diversified portfolio, one must not only pay attention to a single index but also think in terms of different market capitalization size segments, as well as different value-tilted or growth-tilted strategies.

Average Annual Returns as of 3/31/14

Showcasing Diverging Emerging Market Equity Performance in 2014

GULF Has Led the Way: Thus far in 2014, I’ve seen countries or regions with unique catalysts leading the performance picture. The Gulf region is different in that its outperformance can perhaps be attributed to MSCI’s upgrade of the United Arab Emirates and Qatar into emerging markets. This will invariably improve liquidity considerations.

EPI Has Benefitted from India’s Equity Markets Up on Election Optimism: India is undergoing an important election in which the candidate deemed as potentially more “pro-business” has the lion’s share of the momentum, and the equity market has been responding to the potential reform efforts going forward. India’s equities have been breaking out to new highs, as I discussed in a prior blog post.

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