Emerging-market (EM) equities have struggled to get the attention of investors over the past five years. Since 2020, the MSCI Emerging Markets Index has underperformed the MSCI Developed Market Index by a total of 45%, according to JPMorgan.
The article from MoneyWeek discusses the potential of investing in emerging markets, highlighting both the growth and value opportunities these markets present. It explains that emerging markets often offer higher growth rates compared to developed markets due to factors like rapid industrialization, urbanization, and a growing middle class. However, these markets also come with increased risks such as political instability, currency fluctuations, and less mature financial systems. The piece delves into how investors can approach these markets, suggesting a focus on countries with improving governance, economic reforms, and those that are undervalued relative to their growth prospects. It also touches on the importance of diversification within emerging markets to mitigate risks, and mentions specific regions like Asia, Latin America, and Africa as areas with significant potential. The article advises investors to consider ETFs, mutual funds, or direct investments in companies that are leaders in their respective regions, while being cautious about the inherent volatility and the need for a long-term investment horizon.