MSCI Emerging Markets Index Annual Returns History
Direct answer: The MSCI Emerging Markets (EM) Index covers approximately 24 emerging market countries including China (largest weight, approximately 25-30%), India, Taiwan, South Korea, Brazil, and others. Since 1988 inception the index has delivered approximately 8-9% annualized USD returns but with extreme volatility: +66.4% in 1999, −53.2% in 2008, +79.0% in 2009. EM returns depend heavily on U.S. dollar strength, China's economy, and commodity prices.
MSCI Emerging Markets USD Total Return by Year
| Year | Total Return (USD) | Notable Event |
|---|---|---|
| 1993 | +74.8% | EM boom |
| 1994 | −7.3% | Mexico peso crisis |
| 1997 | −11.6% | Asian financial crisis onset |
| 1998 | −25.3% | Asian crisis / Russia default |
| 1999 | +66.4% | Post-crisis recovery |
| 2000 | −30.6% | Dot-com bust / USD strength |
| 2001 | −2.4% | 9/11 / global slowdown |
| 2002 | −6.0% | Brazil election fears |
| 2003 | +56.3% | Commodity supercycle begins |
| 2004 | +26.0% | China demand surge |
| 2005 | +34.5% | Broad EM rally |
| 2006 | +32.6% | BRIC markets surge |
| 2007 | +39.8% | Peak commodity cycle |
| 2008 | −53.2% | Global financial crisis |
| 2009 | +79.0% | Post-GFC recovery |
| 2010 | +19.2% | Strong recovery continues |
| 2011 | −18.4% | China slowdown fears / Europe |
| 2012 | +18.6% | QE-driven rebound |
| 2013 | −2.3% | Taper tantrum / USD strength |
| 2014 | −1.8% | Russia sanctions / USD rises |
| 2015 | −14.9% | China devaluation / commodity rout |
| 2016 | +11.6% | Commodity recovery |
| 2017 | +37.7% | Weak USD / broad EM rally |
| 2018 | −14.3% | Trade war / USD surge |
| 2019 | +18.9% | Fed pivot / USD weakens |
| 2020 | +18.7% | Post-COVID rebound (China led) |
| 2021 | −2.2% | China tech crackdown begins |
| 2022 | −19.7% | USD +15% / Fed tightening |
| 2023 | +10.3% | India outperforms; China lags |
| 2024 est. | +8% | Estimated; India drives gains |
Source: MSCI: Emerging Markets Index. Last verified: September 2026.
Frequently asked questions
Why have emerging markets underperformed developed markets since 2010?
MSCI EM has significantly underperformed MSCI World since 2010, despite earlier outperformance (2003-2007). Key reasons: (1) China underperformance -- China's regulatory crackdown on technology (Alibaba, Tencent), real estate crisis (Evergrande), and geopolitical tensions reduced Chinese stock returns substantially; (2) strong U.S. dollar -- rising USD reduces EM returns for U.S. investors and tightens financial conditions for dollar-indebted EM countries; (3) commodity cycle -- EM is heavily commodity-exposed; falling commodity prices 2013-2020 hurt Brazil, Russia, and commodity exporters; (4) U.S. tech dominance -- the same factor that caused S&P 500 outperformance vs. MSCI World also penalized EM's relatively lower technology weight.
How does the U.S. dollar affect emerging market returns?
The USD has a powerful negative relationship with EM returns: (1) most EM countries price commodities in USD -- stronger dollar reduces commodity prices in local currency; (2) many EM countries and companies have USD-denominated debt -- a stronger dollar raises the real cost of servicing that debt; (3) capital flows -- when U.S. rates rise and the dollar strengthens, global capital flows from EM back to developed markets (especially the U.S.), reducing EM stock prices; (4) currency translation -- U.S. investors holding EM assets see returns reduced by the dollar's appreciation relative to EM currencies. The 2022 EM drawdown (−19.7%) was significantly worsened by the dollar's +15% surge that year.
Should a diversified portfolio include emerging markets?
Financial theory suggests yes: EM offers diversification (different growth drivers than developed markets), long-term demographic tailwinds (younger populations in India, Southeast Asia), and potential catch-up growth. In practice, the diversification benefit has been limited -- correlations between EM and developed markets rose significantly after 2008 (global markets became more correlated during crises). The strongest case for EM currently is India's long-term growth story (world's most populous country, younger demographics than China) and valuation discount vs. U.S. stocks. The weakest case is China's political risk and its potential drag on EM index performance. Many investors now choose India-specific or EM ex-China exposures to reduce this concentration.