The following table lists the returns given by the top 10 emerging markets over the last 8 years.
The table starts with the 2008 financial crisis and then shows the subsequent performance progression thereafter.
Whilst South Africa performed well during and immediately after the crisis, it has performed relatively poorly in the last 4 years finishing last in the final quarter of 2015. Partly this has been due to a greater exposure to a disappointing commodity cycle than other emerging markets (with the exception of Brazil) and partly it has been due to the political and economic challenges that have recently faced South Africa and that have culminated in a deteriorating sovereign credit rating.
Two take-home points from this table would be; note how volatile emerging markets have been over the last 8 years and further note how divergent returns have been within the peer group.
So, unless one has a fully functional crystal ball at hand, don’t try to pick one market or one asset class. Always try to reduce your financial risk by diversifying your portfolio across different asset classes and across different financial markets. This way you will have a smoother return profile from your portfolio and thereby reduce the risk of having to draw down when one particular market is weak.
Source: Paramount Life