Tuesday, January 21, 2014

Historical Returns for the MSCI Emerging Markets Index (1988-2013)

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, 1988-2011, and 1988-2012 time periods.

The chart below (click on the chart for a larger view) shows annual returns for the MSCI EM Index in terms of U.S. Dollars between 1988 and 2013. The returns shown below represent net dividend reinvested returns. The 2013 total return for the MSCI EM Index was -2.60%, lagging considerably behind most other major stock indexes

During the 26 years for which I have data (i.e., 1988-2013), the MSCI EM Index lost value during 11 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 14.79% for the 5-year period, 11.17% for the 10-year period, 10.91% for the 15-year period, and 7.32% for the 20-year period ending in 2013. Annualized returns between 1988 and 2013 were about 11.94% and the Index had a total new return of 1,776% between 1988 and 2013. The performance of the MSCI EM Index between 1988 and 2013 greatly exceeds the 10.50% annualized return and 1,242% 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.  Although Emerging Markets have lagged significantly behind other major indexes in recent years, I expect the trend to reverse at some point in the near future.


Anonymous said...

Hi Jim,

I think your 20 year returns are off. They should have started in 2007 not 2008. Thanks for the great data set.


Anonymous said...

It would be great if you updated emerging market data with 2014 (and soon, 2015) return numbers. Also, do you have these same charts for MSCI EFA? The layout is very helpful.