Through November 22, 2024, global stocks generated year-to-date gains, but still lag U.S. markets.4 However, the MSCI Emerging Market Index’s 8.50% year-to-date total return is about double that of the MSCI EAFE Index, which measures developed market returns.3 This represents an improvement after emerging market stocks lagged performance of developed global markets in 2022 and 2023.
“You’ve seen good returns on a narrow set of emerging market economies, particularly those with a technology focus such as Taiwan and Korea,” says Haworth. “Yet other components like financial stocks make up the largest weighting in the emerging markets index, and those stocks have lagged this year.”
Investing in international stocks
International stocks can contribute to a well-diversified portfolio. “We believe global stocks represent a reasonable opportunity, as they offer more attractive valuations than U.S. stocks,” says Haworth.
Haworth says an emerging market index may be an effective way to incorporate into your portfolio a position in China’s market. “Along with its significant Chinese weighting, emerging market indices also provide exposure to other markets that help diversify investors away from potential risks arising from investing exclusively in China’s market.”
Any changes to your investment strategy should be consistent with your goals, time horizon and risk appetite. Talk with your U.S. Bank wealth professional to review your current financial plan and determine whether there is an opportunity to incorporate emerging market stocks – with exposure to China – into your broader, well-diversified portfolio.
Note: The MSCI Emerging Markets Index captures large and mid-cap equity performance across twenty-four emerging market countries. Investing in emerging markets may involve greater risks than investing in more developed countries. In addition, concentration of investments in a single region may result in greater volatility. International investing involves special risks, including foreign taxation, currency risks, risks associated with possible differences in financial standards and other risks associated with future political and economic developments.