Practical analysis for investment professionals
30 January 2014

Poll: What Explains the Recent Decline in Emerging Markets?

Emerging markets have been pummeled in the past week, with many, including Turkey, falling the most since September 2011. A combination of factors appears to be at work. First, the shift in US monetary policy to reduce easing is making US dollar assets more attractive. Second, after more than five years of being the beneficiary of monetary stimulus, capital is fleeing emerging markets now that an economic rebalancing is at hand.

In a poll conducted earlier this week in the CFA Institute Financial NewsBrief, we asked readers what they thought explained the recent decline in emerging markets.


Is the recent decline in emerging markets, the worst since 2011, a reflection of risks inherent in the markets themselves or merely investors reallocating their portfolios back to developed markets?

Poll: Is the recent decline in emerging markets, the worst since 2011, a reflection of risks inherent in the markets themselves or merely investors reallocating their portfolios back to developed markets?


More than 92% of the 785 respondents believe that the question identifies the important factors. Around 45% think the recent decline is a combination of inherent risks and investors reallocating capital. Yet, for many investors, the first word that comes to mind when thinking of emerging markets is “risk,” which was true for 26% of respondents. A close number of respondents — 21% — think investors are less concerned about risk and are reallocating capital to capture the returns of improving developed markets. Whatever the cause, the fall has been sudden and steep.


Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

About the Author(s)
Jason Voss, CFA

Jason Voss, CFA, tirelessly focuses on improving the ability of investors to better serve end clients. He is the author of the Foreword Reviews Business Book of the Year Finalist, The Intuitive Investor. Previously, Jason was a portfolio manager at Davis Selected Advisers, L.P., where he co-managed the Davis Appreciation and Income Fund to noteworthy returns. He holds a BA in economics and an MBA in finance and accounting from the University of Colorado.

Ethics Statement

My statement of ethics is very simple, really: I treat others as I would like to be treated. In my opinion, all systems of ethics distill to this simple statement. If you believe I have deviated from this standard, I would love to hear from you: jason@jasonapollovoss.com

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