Is Now the Time to Invest in Emerging Markets?

For some investors seeking to diversify their portfolios, emerging markets are looking increasingly attractive.

Some form of this article, this one in the WSJ, has been written for years.* Emerging markets, as a whole, have been trading at a valuation discount to the developed markets for years now. Just ask the folks at GMO.

The question isn’t whether NOW is the time in emerging markets. The correct question is whether you should invest in emerging markets at all?

Source: YCharts

A broadly diversified index investor would already own some emerging markets as a part of a global portfolio. It’s not at all clear whether the typical investor needs any more exposure than that.

Emerging market returns have badly lagged the U.S. market for a decade now. So some catch-up, at some point, wouldn’t be all that surprising . What would be surprising is if somehow you successfully timed it.

*To be clear, this isn’t a statement about the article, per se.