Friday, September 13, 2013

Historical Returns for the MSCI Emerging Markets Index (1988-2012)

The Morgan Stanley Capital International (MSCI) Emerging Markets (EM) Index is the preeminent emerging markets equity index. I have previously discussed annual returns of the index during the 1989-2008, 1989-2009, 1988-2010, and 1988-2011 and time periods.

The chart below lists annual returns for the MSCI EM Index in terms of U.S. Dollars between 1988 and 2012. The returns shown below represent net dividend reinvested returns.*

During the 25 years for which I have data (i.e., 1988-2012), the MSCI EM Index lost value during 10 calendar years and gained value in 15 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%. As I have previously discussed, the best extended stretch of strong returns occurred between 2003 and 2007 during which the index gained an impressive 382.96%, an annualized gain of approximately 37.02%.

The annualized returns were -0.91% for the 5-year period, 16.52% for the 10-year period, and 8.96% for the 15-year period ending in 2012. Annualized returns between 1988 and 2012 were about 12.56% and the Index had a total new return of 1,826% between 1988 and 2012. The performance of the MSCI EM Index between 1988 and 2012 greatly exceeds the 9.71% annualized return and 913% total return of the S&P 500 Index during the same time period.

Emerging Markets are typically critical portion of an investment portfolio of any stock market investor with a long-term investment strategy.  Investment advisers typically recommend limiting Emerging Markets to no more than 10-15% of an aggressive investor's portfolio.

* 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 2013 in another post.

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