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ETF Specialist

The Dramatic Evolution of Emerging Markets

What does the dynamic nature of these markets mean for portfolio construction?

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Per MSCI, emerging-markets stocks made up about 13% of the global stock market (using the MSCI All Country World Investable Market Index as a proxy) as of the end of 2020. When the MSCI Emerging Markets Index was launched in 1988, these stocks represented less than 1% of the world’s investable equity market capitalization.

Emerging markets are dynamic by definition. They have changed dramatically in the past three-plus decades, and the pace of change has only accelerated in recent years. Here, I’ll look at emerging-markets stocks’ long- and short-term performance, the most recent phase in their ongoing evolution, how their makeup may evolve in the future, and what this all might mean with respect to portfolio construction.

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Ben Johnson does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.