Out of 167 emerging-market equity funds with a global mandate, just four have returned more than 20% so far this year, and overall the benchmark is up just over 14%. Meanwhile, MSCI’s sub-index for Latin America is up 25%, while the Eastern Europe sub-index is up 45%. That compares with an advance of less than 5% on the S&P 500.
In a banner year for emerging markets, the best returns have gone to investors who targeted regional indexes and ignored the Asia-heavy global benchmarks.
While the most widely tracked gauge of developing-nation stocks, the MSCI Emerging Markets Index, is beating the S&P 500 for the first time since 2017, returns for sub-indexes in Latin America and Eastern Europe are as much as four times higher. That’s because the benchmark global indexes are dominated by companies in Asia, the region most impacted by President Donald Trump’s tariff threats that has also been the biggest laggard in an otherwise extraordinary year for the asset class.
