Investing in Emerging Markets

The term “Emerging Markets” was coined in 1981 by the International Finance Corporation as a marketing term to help make the case for foreign investors investing in developing economies. Today, emerging markets make up roughly 10-12% of the global market capitalization representing around 25 countries including China, Taiwan, India, South Korea, and, until recently, Russia.

Characteristics like high economic growth expectations and attractive valuations compel some investors to overweight emerging markets in their portfolios, but there are some often overlooked facts, costs, and risks that should be carefully considered.

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[xxxXXX]

just watched a few of your videos. you are one of the only wealth manager on youtube who isn't a complete bullshit artist. everything you say about index funds, income investing, financial advisors, is totally right.

[srikanthramanan]

Appreciate Ben for your outstanding content that's backed by statistical data and empirical evidence instead of personal opinions. One of the most underrated and underappreciated amongst finfluencers.

[mriegger]

Perfect hairline that is the envy of every man over the age of 25. Still shaves his head.

[undercoverdudes]

I'm a big fan of having a market cap weighted amount of EM in my portfolio, the lack of correlation between it and companies from developed nations is a great differentiator

[juliankilian]

One of the most professional finance YouTubes, thank you !

[misterr]

I'm a global investor from Brazil with a passive investing strategy with focus on value. That said, I do not have any restrictions investing in other countries and I do have some benefits in doing so (taxes are lower if I sell shares, per example). My strategy is to invest 20%-25% in EM (currently at 20%), because in doing so I decrease the cambial risk because I live in a EM country. This video helps a lot, thank you very much.

[rod_-]

Im glad you are back!!!! Best CFA in YouTube!! 🔥

[victorgbs]

Missed your videos, Ben. Keep up the good work. I always link them when I need evidence based help in favor of index investing.

[JZ]

Thank you for making these. I learn a ton directly (in this case for example about the negative skewness of emerging markets) and about topics I need to learn more about simply to fully grasp Ben's sharing (like the double tax withholding). Thank you!

[takedashingjen]

Hell yeah, thank you for this video. I comment before watching. Experts in Germany often call investing in EM factor investing because of political risk. My portfolio hast around 20% EM. Lets see if this is a good idea (proceeds to watch video)

[LundeMaja]

What I love about Ben is that his message is simple, consistent and he can continually provide evidence to support his claim! If you've watched one of his videos, or listened to one of his podcasts, you know what the message is!

[mikegb]

I was overweight emerging markets since around 2005 because of a few of Burton Malkiel's books that I read. It had a few good years, but after that, it severely under-performed U.S. stocks. Oh well... It was after reading Burton Malkiel that I went 100% with index funds and that was the best investment decision of my life. So, I forgive any bad advice that I got from him.

[TheBlackMage]

Great points! This is why I don't like investing in emerging markets. I don't think investors can easily quantify the expropriation risk.

[MillennialsWithMoney]

I’ve typically invested in ETFs tracking emerging economies mainly through looking at the underlying assets (stocks). I still believe this is a good guideline but appreciate that there is a much greater level of depth in things to take into account after watching this video.

[SeanSurajJeremiah]

Please keep producing content like this Ben. It's jammed packed with valuable information, concepts and citations for econs plebs like myself.

[thejoostvankempen]

Thanks for yet another insightfull video. It’s a bit harder to follow now the graphics are missing. Hope they will return in future video’s!

[singularity]

Thank you for providing great information without any clickbait bs. You are a rare breed.

[arthurmorgan]

DFA just released Emerging Markets Value and Emerging Markets Profitability ETFs. I’m thinking of getting some EM exposure through those two.

[janr]

I really enjoyed the podcast and I also enjoyed this episode. Its great to have a short version with all none of the research results missing, especially when you hesitated to share a podcast. I quit emerging markets about a year ago, mostly because I found them hard to track and because of taxes. The best ETFs have a tracking error of zero or 10 basis points. On the other hand here in Germany you can track the S&P 500 for less cost and it has a negative tracking error of 50 basis points. I rather beat the S&P 500 by 0, 5 % and have less volatility and less skewness than the additional return from EM. Great video Ben!

[samsonsoturian]

One of the problems with "emerging markets" is the definition is extremely arbitrary and skewed to include countries with low costs of living regardless of their actual development.