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ETF Specialist

Are Emerging-Markets Stocks Too Cheap to Ignore?

Almost, but not quite.

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A version of this article was published in the September 2015 issue of Morningstar ETFInvestor. Download a complimentary copy of ETFInvestor by visiting the site.

Emerging-markets stocks have gone from the penthouse to the outhouse. Over the 10-year period ended Oct. 31, 2010, the MSCI Emerging Markets Index experienced an annualized return of 14.62%. The S&P 500’s annualized return was negative 0.02% over this same span. For the five-year period ended Oct. 31, 2015, the MSCI Emerging Markets benchmark declined by 2.8% on an annualized basis, while the S&P 500 was in full-on bull-market mode, gaining 14.33% annually. Today, emerging-markets stocks are unloved, rife with risk, and (unsurprisingly) were recently trading at their lowest levels since 2009. Have they gotten too cheap to ignore?

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