The following is an excerpt from Best ETFs for 2018: iShares Emerging Markets Dividend ETF Will Shine, originally published on InvestorPlace.
It has been an ugly decade for most emerging markets. As a sector, they’ve been beaten like the proverbial red-headed stepchild.
First, there was the 2008 meltdown. As the old Wall Street maxim goes, when the United States sneezes, the developing world catches a cold. That’s pretty well sums up what happened during our mortgage crisis. In 2008, the S&P 500 lost about 37% of its value. The popular MSCI Emerging Markets index lost fully half of its value.
But then, a funny thing happened. The U.S. economy finally hit bottom, and U.S. stocks began an epic rally that continues to this day.
Alas, I can’t say the same for emerging markets. About the time the U.S. economy stabilized, Europe slid into a major crisis with Greece and the other “peripheral” economies that would last, off and on, for the next four years.
Europe, like the U.S., is an important export market for many emerging markets. So weakness in the Old World put a major wet blanket on an emerging market recovery.
And if only that were the end of it…
We also had a major commodities and energy bust, major unrest in the Arab world and a string of corruption scandals in Latin America … all of which sent investors running for the doors.
But then, a funny thing happened. By early 2016, the bad news was finally fully priced in, and emerging markets found a bottom. It has been off to the races ever since.
If you time a bull market in emerging market stocks correctly, you can make an absolute killing, doubling or tripling your position or more in just a few years. And I believe that’s the position we find ourselves in today. After years of chaos and upheaval, emerging markets are finally ready to shine again.
To read the rest of the article, see Best ETFs for 2018: iShares Emerging Markets Dividend ETF Will Shine,