What is the 'MSCI Emerging Markets Index'

The MSCI Emerging Markets Index is an index created by Morgan Stanley Capital International (MSCI) designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index that consists of indices in 23 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and the United Arab Emirates.

BREAKING DOWN 'MSCI Emerging Markets Index'

Emerging markets are considered relatively risky because they carry additional political, economic and currency risks. They certainly are not for those who value safety and security above all else. An investor in emerging markets should be willing to accept volatile returns; there is a chance for large profit at the risk of large losses. An upside to emerging markets is their performance is generally less correlated with developed markets. As such, they can play a role in diversifying a portfolio, and thus reduce overall risk.

Mutual Fund Benchmark

Initiated in 1988, the MSCI Emerging Markets Index (MSCI EMI) represented 10 nations with a total world market capitalization of less than 1%. In 2016, the index has since grown to incorporate 23 countries that comprise about 10% of global market cap. Hence, the MSCI EMI is appropriately used as a benchmark for performance by many emerging market growth mutual funds.

Diversified emerging market portfolios such as the JPMorgan Emerging Markets Equity Fund, a managed pool overweight the MSCI EMI as of March 31, 2016, by 6.5% in the consumer discretionary sector and 5.5% in the investment company sector, use the index as a measuring stick for performance. Fund returns at net asset value (NAV) have closely tracked the index despite the marked difference in holdings. The portfolio returned 2.88% annually on average through March 2016, a figure that sits below the corresponding return of the index by 14 basis points (bps).

MSCI EMI Exchange-Traded Funds

There is a method to invest directly in the index itself. The iShares MSCI Emerging Markets exchange-traded fund (ETF) owns a basket of securities representing at least 90% of the weightings held by the index. Among its top 10 holdings as of May 30, 2016, are South Korean electronics giant Samsung Electronics Company Ltd. and Chinese technology conglomerate Tencent Holdings Limited. Nuveen Asset Management equity strategist Bob Doll sees intermediate-term opportunity in the ETF as droves of developing market citizens ascend from lower classes to the consumption class over the next several years.

  1. MSCI Inc

    MSCI Inc is an investment research firm that provides indices, ...
  2. MSCI ACWI - All Country World Index

    The MSCI ACWI is a market capitalization weighted index designed ...
  3. International Investing

    International investing is an investing strategy that involves ...
  4. Equated Monthly Installment - EMI

    An equated monthly installment is a fixed payment amount made ...
  5. CIVETS (Colombia, Indonesia, Vietnam, ...

    An acronym given to the countries Colombia, Indonesia, Vietnam, ...
  6. MSCI EMU Index

    A market capitalization weighted index maintained by Morgan Stanley ...
Related Articles
  1. Investing

    5 Emerging Market Equity ETFs to Watch in 2018

    Five top ETFs for emerging market investors.
  2. Investing

    Top 3 Emerging Markets ETFs (VWO, EEM)

    Discover some of the most popular and best performing exchange traded funds that investors utilize to obtain easy exposure to emerging markets.
  3. Investing

    4 Funds to Short the MSCI Emerging Markets Index (EUM, EEV)

    Discover several strategies to short The MSCI Emerging Markets Index using these four ETFs.
  4. Investing

    Is this ETF Your Best Bet for Emerging Markets?

    Are emerging markets still emerging? If you believe so, this ETF could be your best bet.
  5. Investing

    Top 5 Emerging Market ETFs (EEM, GMM)

    Find out which emerging markets ETFs have enough of an asset base, trading volume and low fees to be considered top choices in the segment.
  6. Investing

    With Emerging Market ETFs Rising, Remember the Differences

    Emerging markets ETFs are hot again, but remember important differences between the various offerings.
  7. Investing

    ETF Flows: Emerging Market Equity ETFs Shedding Assets (EEM, VWO)

    Discover five exchange-traded funds that invest in emerging market equities and experienced large year-to-date capital outflows as of March 4, 2016.
  8. Insights

    Turkish Lira at Biggest Daily Drop in 8 Years Following Attempted Coup

    A failed military coup against Erdogan's regime caused a mass Lira selloff. Here is a list of some ETFs with exposure to Turkey or the Turkish Lira.
  9. Investing

    Smooth Sailing Seen for Emerging Markets ETFs

    Volatility is usually common with emerging markets ETFs, but that is changing.
  10. Investing

    Tapping International Markets With Smart Beta ETFs

    Smart beta is earning its place in international equity strategies and investors should take note.
  1. What emerging markets are best suited for investing in the financial services sector?

    Discover some of the primary emerging market countries that offer attractive investment opportunities in the financial services ... Read Answer >>
  2. What are the main benchmarks that track the performance of the utilities sector?

    Learn about the main benchmarks that track the performance of the utilities sector, such as the Dow Jones Industrial Average ... Read Answer >>
  3. Is it possible to invest in an index?

    While you cannot buy indexes, which are just benchmarks, there are three ways for you to mirror their performance. Read Answer >>
  4. What telecommunication companies have the largest exposure to emerging markets?

    Read about some of the major telecommunications players that have exposure to emerging markets in China, India, Russia, Brazil ... Read Answer >>
  5. How Do I Find Mutual Funds That Track Indexes?

    Two good sources for finding index funds are Fidelity Investments and Vanguard. Read Answer >>
Hot Definitions
  1. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  2. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
  3. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
  4. Income Statement

    A financial statement that measures a company's financial performance over a specific accounting period. Financial performance ...
  5. Leverage Ratio

    A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt, or ...
  6. Annuity

    An annuity is a financial product that pays out a fixed stream of payments to an individual, primarily used as an income ...
Trading Center