Should investors consider disaggregating their emerging markets exposure?

EM not one group

Strategists are often quick to group economies with an acronym or catch-all term but very rarely do the participants of those groups exhibit the same risk and return characteristics.

The war between Russia and Ukraine is yet another example of why emerging market countries should not be viewed as one homogenous group. More recently we have seen a trend of investors starting to disaggregate the individual country constituents of emerging markets and invest on a more nuanced country-by-country basis. Since Jim O'Neil created the term BRIC in 2001, the annualised returns of Brazil, Russia, India, and China have been 7.8%, -42%, 11.2% and 8.2% respectively. The differing drivers of performance and volatility for these markets over time has been clear. More recently...