What’s in the Emerging Markets Index?
- Joshua M Brown
- April 11th, 2012
When people hear the term “emerging markets” the first thing they think of is BRIC. And while the BRIC nations loom large in the emerging markets equity asset class, they are by no means the whole thing. Right now we’re playing emerging markets through a fundamentally-weighted index that actually re-weights China and India lower than they’d be if we just bought the index flat out.
To illustrate the various weightings and characteristics of the traditional EM universe, I’ve pulled in a few charts from SSGA (of SPDRs fame) below…
First, here are the countries considered to be in the EM according to MSCI:
And this is the weighting breakdown by country, BRICs are about 40% – less than half:
Keep in mind how small the emerging markets still are compared to US, Europe and Japan (developed):
Finally, here’s why EM stock markets should be good bets long-term (even though there is zero correlation between stock performance and GDP over shorter timeframes):
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.