Does high economic growth go hand-in-hand with high stock returns?
That’s the question WSJ columnist Jason Zweig is asking in Under the ‘Emerging’ Curtain.
Zweig points out that investors have aggressively embraced the emerging markets this year with over $10 billion pouring into related funds and the iShares MSCI Emerging Markets Index Fund (EEM) becoming the fourth largest exchange traded fund.
However, Zweig also points to recent research that finds stocks in countries with the highest economic growth earn an average annual return of 6% while stocks in slow growth countries return 12% on average. Turns out that high growth countries also tend to have highly valued stocks.
For more information, see Investing in Emerging Markets with Exchange Traded Funds.
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