Emerging Markets

Bill Parrott |

Emerging markets account for about 14% of the world's stock market cap, or $10 trillion in assets.[1] Companies listed in Brazil, Mexico, Taiwan, Korea, China, and India account for most of the assets in this sector.

Over the past decade, the S&P 500 has trounced the MSCI Emerging Markets Index by 207%%. The S&P 500 is up 216%, while the emerging market index has barely budged, up a paltry 9%.


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What's the point of allocating assets to this sector if the returns are so poor? It's a fair question. The main reason to add international investments to your portfolio is for diversification. During the lost decade from 2000 to 2010, the S&P 500 lost 24%, while emerging markets soared 102% - a difference of 126%. And until last June, the two indices were neck in neck for performance this century.

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An allocation of 5% to 10% of your portfolio makes sense for emerging markets.

April 18, 2022


Note: Past performance is not an indication of future performance.



[1] DFA 2020 Matrix  Book