MSCI Emerging Markets Index Enters Year-to-Date Loss

Additionally, the stronger U.S. dollar does not have to spell the demise of emerging markets stocks.

“There is no doubt that the rapid and surprising appreciation of the dollar has hurt EM assets. That said, the dollar is not the sole, or even primary determinant of emerging market performance. For equities in particular, changes in the dollar have historically had a modest impact on relative returns,” said BlackRock.

Investors have added nearly $8 billion to the iShares Core MSCI Emerging Markets ETF (NYSEArca: IEMG) this year, making it the second-best ETF in terms of new assets added. IEMG is the low-cost answer to EEM. Rebounding global economic activity is another reason not to bail on the likes of EEM and IEMG right now.

“In particular, a likely acceleration in capital spending should be supportive of global trade, and by extension emerging markets. For investors who have already lived through the volatility, this is probably the wrong time to sell,” notes BlackRock.

For more information on the developing economies, visit our emerging markets category.