After a half-year slipping away, emerging markets have sprung back to life in the new year. VWO, Vanguard’s emerging market ETF, is up 14.8% YTD, twice the gain of the S&P, which at 1350 is itself pushing towards a new interim high since its peak in Oct. 2007.
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Emerging markets fell hard in Oct. and Nov., and so are still 6.5% behind the S&P on a 52-week basis. That’s one of the fun-with-numbers aspects of equity investing. Pick a start date carefully enough, and you can substantiate just about any comparison you care to make.
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With volatility back to more normal levels, equity regions and sectors are showing more characteristic beta—variance from market average—then during the crazy days of last year when a falling tide sank everything in sight.
Is there a message here? Sure—it’s time to get back to portfolio basics and diversify your risk assets by regions, sectors, and style. Some go up, some go down, and you win. You might not win the lottery, but you might keep your shirt.
Meanwhile, take a look at some Credit Suisse Research Institute publications on emerging markets:
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A key driver of near/mid-term economic growth—new consumer spending—is clearly rising in many emerging market regions.