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Although emerging markets have underperformed developed global equity markets thus far in 2013, the gap is narrowing, according to Russell Indexes. And in September to date, emerging markets have actually outperformed developed global markets as illustrated by the Russell Emerging Markets Index and the Russell Global Developed Index.
- The Russell Emerging Markets Index lost (-2.4%) year-to-date as of September 17, as compared to a 17.3% return for the Russell Global Developed Index for the same time period.
- For the third quarter as of September 17, however, the gap has narrowed. The Russell Emerging Markets Index returned 4.5% as compared to a 5.9% return for the Russell Developed Index. And in September as of September 17, the Russell Emerging Markets Index returned 6.4%, outpacing the Russell Developed Index (+4.0%) by nearly 2.5%.
- Emerging Markets Index country constituents Greece (+18.8%), Poland (+13.3%), China (+12.4%) and Russia (+11.7%) have led Index in terms of return since the beginning of the third quarter.
In addition, as of September 17, the current 1 year forward weighted average price to earnings ratio for the Russell Emerging Markets Index is 17.9 as compared to a 21.9 P/E for the Russell Global Developed Index. This widens the gap from January 2, 2013, when the P/E ratios for these two indexes were 17.5 and 18.0, respectively.
"China has been a major contributor to the performance of the Russell Emerging Markets Index in recent months, due to its size within the Index and its strong influence on investor confidence in the region. As investors appear to have adjusted to the prospect of slowing growth and negative news on China has ebbed, Chinese equities have benefitted," said Gustavo Galindo, emerging markets portfolio manager at Russell Investments. A better China picture, improving fundamentals and attractive valuations relative to developed global markets help underscore the continued important role emerging markets can play as part of a broadly diversified global multi-asset portfolio."
Russell Indexes Performance
| INDEX | 2013 YTD AS OF SEP 17TH | 3RD QTR. AS OF SEP 17TH | MTD AS OF SEP 17TH |
|---|---|---|---|
| Russell Emerging Markets Index | -2.4% | 4.5% | 6.4% |
| Russell Global Developed Index | 17.3% | 5.9% | 4.0% |
| RUSSELL EMERGING MARKETS INDEX COUNTRY CONSTITUENT |
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| UAE | 51.6% | 6.9% | 0.8% |
| Brazil | -13.1% | 4.4% | 10.5% |
| Chile | -14.7% | -6.5% | 5.2% |
| China | 5.6% | 12.4% | 5.8% |
| Columbia | -8.7% | 7.1% | 2.2% |
| Greece | 6.1% | 18.8% | 13.2% |
| Indonesia | -13.0% | -21.4% | 2.9% |
| India | -16.3% | -7.7% | 8.9% |
| Korea | -0.7% | 10.8% | 5.2% |
| Mexico | -2.6% | 0.9% | 5.5% |
| Malayasia | 1.7% | -5.2% | 2.8% |
| Philippines | -0.2% | -5.9% | 5.1% |
| Poland | -0.4% | 13.3% | 2.1% |
| Russia | -1.6% | 11.7% | 10.1% |
| Thailand | 2.2% | -4.0% | 12.7% |
| Turkey | -13.0% | -8.0% | 13.0% |
| Taiwan | 6.9% | 3.1% | 2.8% |
| South Africa | -4.5% | 9.2% | 9.2% |
Source: Russell Investments.
Past performance does not guarantee future performance. This material is not an offer, solicitation or recommendation to purchase any security. Returns cited are euro-denominated. Russell Emerging Markets Index country constituents the Czech Republic, Egypt, Hungary, Peru and Morocco had less than 10 constituents or constituents with more than 30% weight in the index so were not included in the Individual breakdown.
Investments in emerging or developing markets involve exposure to economic structures that are generally less diverse and mature, and to political systems which can be expected to have less stability than those of more developed countries. Securities may be less liquid and more volatile than US and longer-established non-US markets.
Opinions expressed by Mr. Galindo reflect market performance and observations as of September 17, 2013 and are subject to change at any time based on market or other conditions without notice.
