What is Emerging Markets?
Emerging markets (EM) include China, India, Brazil, Mexico, South Africa, Indonesia, and others classified by MSCI/FTSE as transitioning between developing and developed status. EM equities (tracked by EEM, VWO ETFs) represent ~10-12% of global market cap but ~50%+ of global GDP. EM debt is split between sovereign and corporate, hard currency (USD) and local currency.
Why it matters for investors
EM offers exposure to demographic growth, urbanization, and rising middle classes โ secular trends underrepresented in developed-market portfolios. EM is also more volatile, dollar-sensitive (strong USD typically hurts EM), and commodity-sensitive. EM debt offers higher yields than DM but carries currency and sovereign risk.