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.

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.

Historical Returns for the MSCI Emerging Markets Index (1988-2011)

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, and 1988-2010 time periods.

The chart below lists annual returns for the MSCI EM Index in terms of U.S. Dollars between 1988 and 2011. The returns shown below represent net dividend reinvested returns.*

As illustrated below, the MSCI EM Index is extremely volatile. During the 24 years for which I have data (i.e., 1988-2011), the MSCI EM Index lost value during 10 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 index gained an impressive 382.96%, an annualized gain of approximately 37.02%.

The annualized returns were 2.40% for the 5-year period, 13.86% for the 10-year period, and 6.87% for the 15-year period ending in 2011. Annualized returns between 1988 and 2011 were about 12.33% and the Index had a total new return of 1,529% between 1988 and 2011. The performance of the MSCI EM Index between 1988 and 2011 greatly exceeds the 9.45% annualized return and 773.66% 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.

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 2012 in another post.

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.

Historical Returns for the MSCI Emerging Markets Index (1989-2009)

The Morgan Stanley Capital International (MSCI) Emerging Markets (EM) Index is one of the most widely-followed emerging markets equity indices. In the investment community, "Emerging Markets" typically refers to a social or business activity of nations that are in the process of rapid growth and industrialization. In March 2009, I discussed annual returns between 1989 and 2008 for the MSCI EM Index. 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 year 2009.

The chart below lists annual returns for the MSCI EM Index in terms of U.S. Dollars between 1989 and 2008. Returns for the MSCI EM Index from 1993-1998 represent gross dividend reinvested returns, and returns from 1999-2009 represent net dividend reinvested return.*

As shown in the chart below, the MSCI EM Index is extremely volatile. During the 21 years for which I have data (i.e., 1989-2009), the MSCI EM Index lost value during 9 calendar years and gained value in 12 other calendar years. The worst returns came during 2008 when the Index plumetted 53.33% and the best annual gains came during 2009 when the Index soared 78.51%. However, despite the massive return during 2009, the Index finished 2009 at a level 16.68% below where it was at the start of 2008.

The annualized returns were 15.51% for the 5-year period, 9.78% for the 10-year period, and 7.14% for the 15-year period ending in 2009. Annualized returns between 1989 and 2009 were 12.55% and the Index had a total new return of 1,096% between 1989 and 2009. The performance of the MSCI EM Index between 1989 and 2009 greatly exceeds the 9.22% annualized return and 537% total return of the S&P 500 Index during the same time period.

Emerging Markets may be a critical portion of an investment portfolio of any stock market investor. The economies of Emerging Markets typically grow much faster than those of Developed Markets, such as the United States. 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 2013 in another post.

Historical Returns for the MSCI Emerging Markets Index

The Morgan Stanley Capital International (MSCI) Emerging Markets (EM) Index is one of the most widely-followed emerging markets equity indices. In the investment community, "Emerging Markets" typically refers to a social or business activity of nations that are in the process of rapid growth and industrialization.

There are currently 24 Emerging Markets tracked by the MSCI EM Index: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey. Of the tracked Emerging Markets, Brazil, Russia, India, and China (the "BRIC" countries) are arguably the markets with the greatest long-term growth potential.

The chart below lists annual returns for the MSCI EM Index between 1989 and 2008. Returns for the MSCI EM Index from 1993-1998 represent gross dividend reinvested returns, and returns from 1999-2008 represent net dividend reinvested return.* I acquired this data from a .pdf of returns for emerging markets that I found on the website for the Lazard Asset Management investment firm.

As shown, the MSCI EM Index has soared during some years and plummeted during others. In 1993, for example, the MSCI EM Index soared 74.83%, and the five-year annualized return between calendar years 2003-2007 was a whopping 37.02%. However, the MSCI EM Index has also occasionally posted abysmal returns. In 2008 the MSCI EM plummeted 53.33%, and the five-year annualized return of the MSCI EM Index between calendar years 1994-1998 was a pathetic -9.27%.

Despite the incredible volatility of annual returns, the overall annualized return of the MSCI EM Index between 1989 and 2008 was a decent 9.98%, and greatly exceeds the annualized return of 8.42% the S&P 500 Index over the same time period.

Emerging Markets can be an important portion of investment portfolio of any stock market investor. The economies of Emerging Markets typically grow much faster than those of Developed Markets, such as the United States. The performance of equity markets of such countries often has a strong correlation with the overall economic growth of such countries. Moreover, 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.

However, given its inherent volatility, many investment advisers 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 2012 in another post.

The iShares Emerging Markets ETF Does a Poor Job of Tracking the MSCI Emerging Markets Index

The iShares Emerging Markets ETF (symbol: EEM) and the Vanguard Emerging Markets ETF (symbol: VWO) both track the same index, the MSCI Emerging Markets Index. However, iShare's EEM has underperformed the underlying index by about 5% so far in 2007 due to a tracking error. Through the end of August 2007, EEM had appreciated about 17.33% for the year, whereas Vanguard's VWO had appreciated about 22.10%. The reason for the performance difference from the two ETFs that track the same index is due primarily to sampling techniques and, to a lesser extent, the larger expense ratio of EEM (0.75%) versus that of VWO (0.30%).

Index funds often fail to purchase all of the securities in the index being tracked. As I understand it, the funds often do this because some of the securities in the index are not very liquid and the purchase of even a small number of shares can substantially move the price of some securities. Moreover, the transaction costs can theoretically be reduced by purchasing a smaller number of different securites in a smaller number of trades.

There are 830 different securities in the MSCI Emerging Markets Index. iShares' EEM holds shares of 552 securities of the MSCI Emerging Markets Index. VWO, on the other hand, holds shares of 858 securities (i.e., VWO holds shares of some securities that are not even in the index in an effort to better track the index).

I'm not sure how iShares decides which of the securities to hold and which to avoid. However, EEM's 5% tracking error this year is very disconcerting. I own shares of EEM in my own accounts. I purchased them a couple years ago because EEM had a much larger trading volume than VWO and the bid/ask spread was lower. However, the trading volume of VWO has definitely increased over the past year or so and the bid/ask spread has been decreasing. From now on, I will probably only purchase shares of VWO because it does a much better job of tracking the MSCI Emerging MArkets Index.