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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?

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