"Suppose you had decided to put your money into equities just as the collapse of Lehman Brothers triggered the biggest global financial crisis since the Great Depression. Would you have done better in emerging market stocks, or the S&P 500?
The answer is: the S&P 500, just. The S&P is up 73.77 per cent in the last 5 years, while the MSCI Emerging Markets index is up a fraction less, at 72.91 per cent.
Of course, that doesn’t tell the whole story. For much of 2009-2011, the difference was huge, as the emerging markets rode a wave of investor optimism buoyed up by oceans of cheap money. That story has turned out not to have very long legs.
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