Emerging Markets

Emerging markets are economies that possess some of the qualities of developed countries and are transitioning from a low income, often pre-industrial economy towards a modern, industrial economy with a higher standard of living. Though the classification used to qualify emerging markets varies, levels of income, quality of financial systems, and growth rates are all popular criteria. Some current examples of emerging market economies include India, Mexico, Russia, Pakistan, Saudi Arabia, China, and Brazil.

The easiest way to invest in emerging markets is through an ETF or mutual fund that is designed to track the performance of top companies in emerging market countries. Investors looking to buy global stocks can invest in an ETF that follows the MSCI Emerging Markets Index, an index that tracks mid-cap and large-cap stocks in 25 countries that can be classified as emerging. 
The largest ETF available to U.S. investors to track the MSCI Emerging Markets Index is the iShares MSCI Emerging Markets Index ETF, which invests at least 80% of its assets in stocks and American depositary receipts included in the index. Investing in emerging markets is considered a risky investment, with outsized potential for losses and gains.

The four main emerging market economies are Brazil, Russia, India, and China (BRIC). Other countries considered emerging markets include Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa. While the criteria varies among different entities, the IMF identifies a total of 40 countries as “emerging market and middle-income.”

Yes, Mexico is frequently classified as an emerging market economy. One of Mexico’s strongest emerging markets characteristics is the pace of its development over the past twenty years. Mexico has also become a strong manufacturing economy, has substantial trade deals with the U.S. and Canada, and its high rate of poverty continues to recede. Still, the country faces significant impediments to becoming a bonified developed nation, particularly in its vulnerability to corruption and the drug trade.