Why Economic Growth Doesn't Always Mean Higher Returns

The term “Emerging Markets” was coined in 1981 by the International Finance Corporation as a marketing term to help make the case for foreign investors investing in developing economies. Today, emerging markets make up roughly 10-12% of the global market capitalization representing around 25 countries including China, Taiwan, India, South Korea, and, until recently, Russia.

Characteristics like high economic growth expectations and attractive valuations compel some investors to overweight emerging markets in their portfolios, but there are some often overlooked facts, costs, and risks that should be carefully considered.

Referenced in this video:
Establishing ‘Emerging Markets’: https://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/about+ifc_new/ifc+history/establishing-emerging-markets
Is Economic Growth Good for Investors? : http://csinvesting.org/wp-content/uploads/2015/05/Jay_Ritter_paper_14_August-Economic-Growth-and-Stock-Returns.pdf
Earnings Growth: The Two Percent Dilution: https://www.researchaffiliates.com/content/dam/ra/documents/FAJ-2003-Two-Percent-Dilution.pdf
Foreign Speculators and Emerging Equity Markets: https://faculty.fuqua.duke.edu/~charvey/Research/Published_Papers/P64_Foreign_speculators_and.pdf
Equity Market Liberalization in Emerging Markets: https://public.kenan-flagler.unc.edu/faculty/lundblac/equity_market_liberalization.pdf
What Segments Equity Markets?:https://www8.gsb.columbia.edu/sites/financialstudies/files/files/equity.pdf
Drivers of Expected Returns in International Markets:https://faculty.fuqua.duke.edu/~charvey/Research/Published_Papers/P69_The_drivers_of.pdf
Conditional Skewness in Asset Pricing Tests: https://faculty.fuqua.duke.edu/~charvey/Research/Published_Papers/P56_Conditional_skewness_in.pdf

------------------
Follow Ben Felix on
- Twitter: https://twitter.com/benjaminwfelix

Visit Rational Reminder: www.https://rationalreminder.ca/

Follow the Rational Reminder on:
- Twitter: https://www.twitter.com/RationalRemind

Visit PWL Capital: https://www.pwlcapital.com/teams/passmore-felix/

Follow PWL Capital on:
- Twitter: https://twitter.com/PWLCapital
- Facebook: https://www.facebook.com/PWLCapital
- LinkedIn: https://www.linkedin.com/company/pwl-capital/

You can find the Rational Reminder podcast on
Google Podcasts:
https://www.google.com/podcasts?feed=aHR0cHM6Ly9yYXRpb25hbHJlbWluZGVyLmxpYnN5bi5jb20vcnNz
Apple Podcasts:
https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582?mt=2
Spotify Podcasts:
https://open.spotify.com/show/6RHWTH9iW7hdnA7eAg7ukO?si=hjZNfLKuSjSeWX38GPqhVA
------------------