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.
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
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
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.