Emerging Markets Lead the Pack

After posting strong results last year, emerging markets equities may be poised to rise further in 2018 with the International Monetary Fund forecasting accelerated growth surpassing that of developed markets once again.
  

  • In 2017 the earnings growth of the MSCI Emerging Markets Index exceeded that of both the MSCI World Index and the S&P 500. Consequently, the MSCI Emerging Markets Index rose more than the other two indexes as well (37.8% return vs. 23.1% return for the MSCI World Index and 21.8% return for the S&P 500).

  • Emerging markets rallies have generated returns of 230% on average.1 The current bull market has produced a 70% gain; if history is a reliable indicator of potential future performance, the rally may be in its early stages.

  • Investors have taken notice with asset flows to emerging markets expected to reach $1.2 trillion this year, up from $1.1 trillion in 2017, according to the Institute of International Finance. This year emerging markets are likely to see the largest percentage increase in flows among all categories, according to a survey of financial advisors by State Street Global Advisors.


Bank of America Merrill Lynch (2017) “Two for Two: Asia/EM Equities likely to double in two years.” The Inquirer.


The views expressed are the views of Fred Alger Management, Inc. as of February 2018. These views are subject to change at any time and they do not guarantee the future performance of the markets, any security or any funds managed by Fred Alger Management, Inc. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities.

Risk Disclosures: Investing in the stock market involves gains and losses and may not be suitable for all investors. Growth stocks tend to be more volatile than other stocks, as the prices of growth stocks tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political and economic development.

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