Is there a risk-managed way to access emerging markets?
While emerging markets have become increasingly more accessible over the past couple of decades, they continue to be risky and pretty unpredictable. For example, at the end of 2015 Brazil had an impending presidential impeachment, low-to-negative growth, runaway inflation, a downgrade to junk by S&P and Fitch, the Petrobras scandals, and currency falling to twenty-year lows versus the U.S. dollar. Yet in 2016, MSCI Brazil was up 66.2%.
Mexico, on the other hand, made significant structural reforms and benefited from close trade relationships with the U.S., but dropped precipitously over the time period. At the end of the day, emerging markets remain almost random in their country-level returns.