The ultimate goal of a portfolio is to have a diverse set of asset classes that provide upside and downside at different times. It’s diversification in a nutshell. And when you get it right, it allows you to realize better long-term returns and limited losses when problems strike. But getting that perfectly diverse set of assets is becoming harder.
Take emerging markets for example.
Developing nations were once a prime spot for investors looking for uncorrelated stock returns and represented the next evolution in international investing. However, lately they have been acting more and more like their developed twins in terms of returns and magnitude.
But that could be changing. New research shows that emerging markets may be getting their mojo back in terms of diversification benefits and returns. For investors, it could mean that its game on for EMs.