From 2000 through 2010, the MSCI Emerging Markets returned 10.9 percent a year, outperforming the S&P 500 by 10.5 percent a year. In typical fashion, investors flocked to emerging market funds. Since then, returns have been poor, providing negative returns in both 2011 and 2013 (as well as in the first two months of this year). From 2011 through 2013, the MSCI Emerging Markets Index about broke even, underperforming the S&P 500 by a cumulative 57 percent – and investors are once again fleeing.
How should investors think about emerging markets? Elroy Dimson, Paul Marsh, and Mike Staunton, authors of the wonderful book The Triumph of the Optimists: 101 Years of Global Investment Returns, bring their unique perspectives to this question in Credit Suisse’s 2014 Annual Global Yearbook.
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