Emerging market stocks outperformed developed markets in 2025 — 34% to 21%. So why are EM valuations near their lowest point relative to DM in over 20 years? Despite strong returns, the forward price-to-earnings (P/E) ratio of the MSCI Emerging Markets Index relative to the MSCI World Index continued to fall through 2025 ending the year near its widest discount since 2003. For advisers reassessing global equity allocations, it’s a reminder that performance and valuation don’t always move together. Explore Emerging Markets Indexes.