Morningstar's Guide to Investing in Emerging Markets

SPECIAL REPORT WEEK: Want long term growth? Invest in emerging markets. These economies offer the potential for great returns but watch out as they come with risks

Emma Wall 13 July, 2015 | 8:54AM

Greece is an emerging market.  A perfect storm of overspending, over-borrowing and a broken banking system has led to first index giant MSCI downgrading the country from developed market classification to an emerging economy in 2013, then S&P Dow Jones Indices followed suit last September.

Thanks to the downgrade, cautious investors were forced to sell any exposure they had to Greece, including institutional investors of pension funds and developed market equity fund managers.

Now, Greece makes up a – very small – proportion of a new group of countries, the emerging markets. But what is an emerging market? Unfortunately for those trying to get their head around emerging markets, there's no universally embraced definition of what constitutes an emerging, or developing, market. Classification systems vary widely between indexers and benchmarks.

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About Author

Emma Wall  is former Senior International Editor for Morningstar

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