The Russell Emerging Markets Index returned 13.7 per cent in 2014 year-to-date as of 23 September, outpacing non-US developed markets.
Within the index, country constituents the United Arab Emirates (+44 per cent), India (+41.1 per cent) and Thailand (+38 per cent) have stood out in terms of year-to-date performance, while Greece (-4.2 per cent) and Russia (-9.9 per cent) have lagged in 2014.
Russell Investments emerging markets portfolio manager Gustavo Galindo says: “Emerging markets have benefitted from a combination of positive market catalysts thus far in 2014. Valuations in general for emerging markets are still cheaper than in the US and other developed markets and, despite strong relative performance, emerging markets are still trading at a significant discount. Investor sentiment has continued to improve, with more investor dollars flowing into the region. Politics have played a role here as the recent India election results and possible unseating of the incumbent in Brazil are positive for these markets. And in terms of cycle, the political cycle for emerging markets continues to evolve to become more market friendly and, while earnings have been coming down for emerging markets companies, we see opportunity for price expansion as earnings begin to improve and counter lower investor expectations.”