Emerging Markets Representing Larger Percentage of World GDP

by: David I. Templeton, CFA

The GDP of emerging markets continues to garner an increasingly larger percentage of world GDP. In 1987, China was not one of the top ten countries by GDP weight; however, by the end of 2008, China accounted for 6.3% of world GDP. By 2030, it is projected that the BRIC countries will account for nearly 25% of world GDP.

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From The Blog of HORAN Capital Advisors
Source: MSCI

At the end of 2009, the US accounted for 41.9% of the weighting the MSCI All Country World Index. This is down from 52.5% at the end of 2003.
From The Blog of HORAN Capital Advisors

For investors, allocating some investment assets toward the emerging markets will likely enhance one's returns; however, emerging market returns do tend to exhibit higher volatility. Additionally, the quality of economic and financial data from emerging countries tends to be less robust than that of the developed markets. One avenue investors can pursue to gain emerging market exposure is via multinational companies that are doing business in these countries. Many of the multinational firms have a stated goal of expanding their business activities in these higher growth countries.