When Mark Mobius launched the Templeton Emerging Markets Investment Trust (LSE: TEM) in the late 1980s, the MSCI Emerging Markets (EM) index comprised just ten countries and accounted for less than 1% of the MSCI All Countries World index (ACWI). Investing in emerging markets was just a discretionary flutter for those that fancied the risk.
Now, the MSCI EM index comprises around 1,387 companies across 24 markets and accounts for 12% of the ACWI. There are another 1,200 companies with a market value above $2bn that are not in the index, as well as many companies listed in developed markets whose business exposure is primarily in EMs. Morgan Stanley estimates that EMs account for 26% of global market capitalisation and 39% of GDP.
But it hasn’t all been plain sailing. In the last 20 years, the annualised dollar return of the EM index has been 9.2%. But having outperformed the World index by 8% per annum in the first ten years, it lost
