The revival of emerging markets

Emerging markets don't enjoy the best reputation in the investment world, at least in recent history.

Over the past 10 years, the average return of this asset class has been 7.8% in dollars, only a little more than half of the S&P 500 in the same period (14.7%).

In addition, on 2 occasions it has been the worst global asset class with declines of -15.3% and -3.6% in '19 and '21 respectively. Moreover, it has only been on “the podium” 3 times ('17, '20 and '25).

China's weakness and the consequent end of the commodities «supercycle”, plus the idiosyncratic noise of some major powers (Brazil and Russia, among others), have been headwinds that are hard to overcome. Thus, many investors have set aside investment in this category to concentrate on the U.S. and other developed markets.

However, the story seems to be changing. Emerging markets' performance in 2025 was 15% above that of the U.S., exceeding 32%; this start of 2026 already records a return of 15%, around 10% above the U.S. and European stock markets.

The explanations are diverse: positive macro surprises relative to deteriorated expectations, an index that today contains almost 40% technology companies and around 20% financial sector, much more in line with the global leading sectors than in the past. This has revived the appetite for these markets.

The good performance of emerging markets should not lead to concentrating your bets. A diversified and disciplined investment policy is the only recipe for achieving consistent performance in the medium and long term.

Column written by José Ignacio Villarroel for Diario La Segunda