Realized Rates of Return in Emerging Equity Markets

Abstract

The authors analyze the returns of nine emerging markets for the period from 1976 through 1997. They find that although currency movements (primarily depreciation) have a dramatic impact on individual country returns, they have a much reduced impact on real returns and insignificant impact on the returns of a diversified portfolio. In addition, the authors demonstrate the importance of rebalancing and its effect on both the risk and return of an emerging market portfolio.