The Trouble With Emerging Markets

Emerging markets were intended to bring greater rewards over the long haul because of soaring economic growth, and they have not lived up to expectations

John Rekenthaler 29 April, 2019 | 3:36PM

Shanghai Stock Exchange, China

In the early 1990s, emerging market funds were all the rage. Their subsequent results have been weaker than even the sceptics believed.

The appeal was obvious. Higher risk, according to conventional theory, meant higher returns – and there was no doubt that emerging markets carried higher risk. They also offered excellent growth prospects. The Asian Miracle was a catchphrase. South Korea, to name one example, had increased its per-capita gross domestic product from $158 (expressed in current terms) in 1960 to $6,516 in 1990. From behind Zambia to ahead of Turkey!

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About Author

John Rekenthaler

John Rekenthaler  John Rekenthaler is vice president of research for Morningstar.

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