The Evolution of the Emerging Markets Universe

Navneet Kumar

January 20, 2021

Global benchmarks have understated the economic importance of emerging markets (EM) at times. But looking at the evolution of the weight of the MSCI EM Index in MSCI ACWI revealed how the importance of EM in global asset allocations has grown. MSCI Research compared the global benchmark weight of the MSCI EM Index as of Dec. 30, 1994 to the weight of the EM Index as it continued to evolve through Nov. 30, 2020. The key driver for the EM’s increased weight was the inclusion of new countries into the index over time, reflecting the fact that a greater number of countries become more accessible to foreign investors and grew in economic importance.