Historical Returns for the MSCI EM Latin America Index (1988-2010)

Morgan Stanley Capital International, Inc. ("MSCI") created an index to track the performance of Latin American stocks in the late 1980s. The MSCI Emerging Markets (EM) Latin America Index was instituted with a market closing value of 100.00 as of December 31, 1987. It is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of emerging markets in Latin America. According to the MSCI website, the MSCI EM Latin America Index currently consists of a combination of the following market returns for Brazil, Chile, Colombia, Mexico, and Peru. The Index is dominated by Brazil and the Mexico, the two largest Latin American economies and stock markets.

Since its inception, the returns for the MSCI EM Latin America Index, although very volatile, have been nothing short of astounding. The MSCI EM Latin America Index closed at a value of 9519.625 on December 31, 2010, a gain of an incredible 9,419.6% since its inception 23 years earlier. The annualized gain of the Index during this time period was 21.91%.

The chart below shows the annual returns for the MSCI EM Latin America Index between 1988 and 2010 and also indicates 5-, 10-, 15-, and 20- year annualized returns. During 23 full calendar years of its existence, the Index increased in value for 16 years and decreased in value for 7 years. The largest calendar year gains were achieved in 1991 and 2009 when the Index soared 149.66% and 104.19%, respectively. The largest calendar year losses were recorded in 1998 and 2008 when the Index soared 35.11% and 51.28%, respectively.

The largest 5-year gain was recorded between 2003 and 2007 when the Index soared 688% for an annualized gain of just over 51% per year during that time period. There were only two 5-year periods during which the Index lost value - those between (a) 1994-1998 when the Index lost 1.74% per annum, and (b) 1998-2002 when the Index lost 7.85% per annum.

There are 14 different 10-year periods shown in the chart below and the Index gained value during each of those 10-year periods. The largest 10-year gain occurred between 1988-1997 when the Index gained 1,489%, or 31.87% per annum.

There are 9 different 15-year periods shown in the chart below and the Index gained value during each of those 15-year periods. The largest 15-year gain occurred between 1991-2005 when the Index gained 1,390%, or 19.74% per annum. [Note that the largest 10-year total return exceeds the largest 15-year total return!]

There are 4 different 20-year periods shown in the chart below and the Index gained value during each of those 10-year periods. The largest 20-year gain occurred between 1988-2007 when the Index gained 8,229%, or 24.75% per annum.

Unfortunately there is no ETF currently available that tracks the MSCI EM Latin America Index. The closest proxy that I have been able to locate is the iShares S&P Latin America 40 Index ETF (symbol: ILF), which tracks an index of stocks trading on the exchanges of four Latin American countries - Mexico, Brazil, Argentina, and Chile.

Although extremely volatile, Latin American stocks can provide quite a kick to investment returns during a bull market. Someone holding an ETF tracking Latin American stocks should consider periodically rebalancing the position to (a) lock in capital gains after years during which those stocks have soared, or (b) increase a position after a year during which the Index dropped in value.

*** I have updated this chart to include returns for 2013 in another post.

Historical Returns for the MSCI EAFE Index (1970-2010)

As I have previously written, the Morgan Stanley Capital International, Inc. ("MSCI") Europe, Australasia Far East ("EAFE") Index is the benchmark index for foreign equity markets and is the foreign equity equivalent of the S&P 500 Index. The MSCI EAFE Index measures the equity market performance of developed markets in Europe, Australasia, and the Far East, excluding the U.S. and Canada.

The Index includes a selection of stocks from 21 developed markets, the largest of which are Japan and the United Kingdom. The MSCI EAFE Index has been calculated since December 31, 1969 and is the oldest large cap international stock index.

The charts below (click on the charts for a larger view) illustrate annual and annualized returns in terms of U.S. Dollars for the MSCI EAFE Index between 1970 and 2010. The Index has returned a total of 3,948% over the past 41 years, or an annualized average of about 9.45% per year.

The annualized return of the MSCI EAFE Index between 1970 and 2009 of 9.45% slightly trails the return of 9.99% of the S&P 500 Index during the same time period.

Many investment advisers recommend investing 20-30% of one's equity portfolio in large cap foreign stocks, such as those comprising the MSCI EAFE Index. Vanguard, for example, offers the Developed Markets Index fund and a corresponding ETF (symbol: VEA) that tracks the MSCI EAFE Index.

Historical Annual Returns for the S&P 500 Index - Updated Through 2010

2010 was an above-average year for the S&P 500 Index as the stock market continued its rebound from the depths of the 2008-200 market crash. The S&P 500 Index rose about 15.06% in 2010.

The annualized return for the S&P 500 Index (and its precursor S&P 90 Index) between 1926 and 2010 was 9.87% and the 5-year annualized return through the end of 2010 was 2.29%, an improvement over the 0.42% return over the 5-year period that ended in 2009. The 10-year annualized return through 2010 was a paltry 1.41%, a small improvement over the pathetic -0.95% recorded in the 10-year period ending in 2009.

According to the Wall Street Journal, the P/E ratio of the S&P 500 Index based on estimated earnings over the next 12 months is approximately 13.52. The average P/E ratio of the S&P 500 Index and other large caps stocks has supposedly been around 16 based on data dating back to the 1800s, so the S&P 500 Index may have some room to grow again in 2011. As of May 27th, 2011 the S&P 500 Index (including reinvested dividends) is up about 6.69% so far this year.


I have posted an updated chart for the returns of the S&P 500 Index during the period between 1926-2015.

Historical Returns for the S&P 400 Midcap Index (Updated Through 2010)

Midcap stocks are generally defined as those of companies with market capitalizations between $1 billion and $10 billion. The S&P 400 Midcap Index is the most widely-followed of all U.S. Midcap stock market indices.

The S&P 400 Midcap Index was introduced in June 1991 by Standard & Poors to track the performance of U.S. mid cap stocks. I have previously posted charts with annual returns through 2007, 2008, and 2009. The chart below has been updated to include returns from 1992-2010.

As shown, the S&P 400 Midcap Index provided another strong year in 2010, returning 26.64%. The cumulative return during calendar years 2009 and 2010 was an impressive 73.98%. The gains during 2009 and 2010 more than make up for the 36.23% drop in 2008. The annualized returns of the Index from 1992-2010 was 11.67% and the 5-year annualized returns through 2010 were 5.74%. The total returns (including reinvested dividends) between January 1, 1992 and December 31, 2010 was an impressive 713.95%.

The chart below also shows five-year annualized returns, starting with the fifth full calendar year of the existence of the S&P 400 Midcap Index (i.e., 1996) and ten-year annualized returns, starting with the tenth full calendar year of the existence of the Index. As shown, the highest annualized five-year return was 23.05% (between 1995 and 1999) and the lowest was -0.08% (between 2004 and 2008). The highest annualized return was 16.10% (between 1995 and 2004) and the lowest was 4.46% (between 1999 and 2008).

As I have mentioned in previous years, I am a big fan of midcap stocks and recommend that any long-term investor seriously consider investing money in midcap stocks, such as those tracking the S&P 400 Midcap Index (e.g., the Midcap SPDR ETF (symbol: MDY) tracks the S&P 400 Midcap Index). Midcaps tend to provide higher returns over time than large cap stocks, such as those comprising the S&P 500 Index, although such stocks are generally more volatile over shorter time periods.

** I have posted an updated chart for the period between 1992-2022.

Historical Returns for the MSCI Emerging Markets Index (1988-2010)

The Morgan Stanley Capital International (MSCI) Emerging Markets (EM) Index is the most widely reported and followed broad-based emerging markets equity index. I have previously discussed annual returns of the index during the 1989-2008 and 1989-2009 time periods. I have updated the information in the current post and in the chart shown below (click on the image for a larger view) to include results for the years 1988 and 2010.

The chart below lists annual returns for the MSCI EM Index in terms of U.S. Dollars between 1988 and 2010. Returns for the MSCI EM Index from 1988-2010 represent gross dividend reinvested returns.*

As shown in the chart below, the MSCI EM Index is extremely volatile. During the 23 years for which I have data (i.e., 1988-2010), the MSCI EM Index lost value during 9 calendar years and gained value in 14 other calendar years. The worst returns came during 2008 when the Index plummeted 53.33% during the financial crisis and the best annual gains came during 2009 when the Index soared 78.51%. The best extended stretch of strong returns occurred between 2003 and 2007 during which the annualized gain of the index was a whopping 37.02%.

The annualized returns were 12.78% for the 5-year period, 15.89% for the 10-year period, and 8.76% for the 15-year period ending in 2010. Annualized returns between 1988 and 2010 were 13.90% and the Index had a total new return of 1,897% between 1988 and 2010. The performance of the MSCI EM Index between 1988 and 2010 greatly exceeds the 9.78% annualized return and 755.6% total return of the S&P 500 Index during the same time period.

Emerging Markets should be critical portion of an investment portfolio of any stock market investor with a long-term investment strategy. The economies of Emerging Markets typically grow much faster than those of Developed Markets, such as the United States and the performance of equity markets of such countries often has a strong correlation with the overall economic growth of such countries. Also, as I have discussed previously, the U.S. Dollar will likely continue to weaken in the future as the country becomes more and more dependent upon foreign investment.

Many investment advisers recommend limiting Emerging Markets to no more than 10-15% of an aggressive investor's portfolio because of the inherent volatility of equities in Emerging Markets.


* The performance data shown is slightly different than the performance data I saw for the MSCI EM Index at Index Universe, and I am not sure of the reason for the discrepancy.

 ** I have updated this chart to include returns for 2012 in another post.

1980 - 2010 Stock Market Returns for Various Indices

Since 2007 I have been posting charts showing annual stock market and bond market returns for various indices for the time periods from 1980-2006, 1980-2007, 1980-2008, and 1980-2009. These charts show returns for small cap indices (Russell 2000, Russell 2000 Value, and Russell 2000 Growth), large cap indices (S&P 500, S&P/Citi 500 Value, and S&P/Citi 500 Growth), a broad-based foreign stock index(Morgan Stanley Capital International Index for the developed stock markets of Europe, Australasia, and the Far East ("MSCI EAFE index")), an index of bonds (Barclays Capital Aggregate Bond Index Lehman Brothers Aggregate Bond Index ("BC Agg."))*, and the Nasdaq Composite Index. These charts have been updated as shown below (click on the image for a larger view) to reflect returns for 2010.

2010 was a good year across the board for most of the major stock indices as equities and bonds extended their rebound from the 2008 market collapse. Foreign stocks were hit hard at the beginning of 2010 as fears of a collapse of the Euro-zone after Greece experienced severe economic distress. Foreign markets eventually started to recover in May 2010 when the Eurozone agreed to bail out Greece. Equities also rallied strongly between September and December 2010 as the Federal Reserve ("FED") began implementing a program of quantitative easing known popularly as "QE2" pursuant to which the FED began purchasing up to $600 billion in bonds.

Small Caps provided the strongest returns during 2010, as shown below. The Russell 2000 Growth Index rose 29.09%, the Russell 2000 Index rose 26.86%, and the Russell 2000 Value Index rose 24.50%. Large caps also performed well, the S&P 500 Growth, Value, and Composite indices each returning slightly over 15%. Tech stocks also performed well, as evidenced by the return of 16.91% of the Nasdaq Composite Index. Foreign stocks lagged, with the MSCI EAFE Index rising a mere 7.75%, as a consequence of the economic distress within the Eurozone. Bonds provided steady returns as they have for the past 30 years, with the BC Agg. Index rising 6.54%.

As shown in the chart below, the Russell 2000 Value Index has provided the strongest returns by far between 1980 and 2010, returning a total of 4,349.98%, or an average of 13.02% per year. The total returns of the Russell 2000 Value Index has returned more than 1,600% more relative to its initial value on December 31, 1979 than the next best index I tracked, the S&P 500 Index.


* The BC Agg. bond index was known as the Lehman Brothers Aggregate Bond Index prior to 2008.

** Edit - January 2, 2017 ***
I have updated this chart with results through 2016.