One of the important points to remember about any major index is that the top stocks in the index change year over year. This is true for any market. In emerging markets it is even more relevant since leaders in emerging markets compete more aggressively and established players are more easily replaced by newer firms. With that said, the following table shows the top 10 stocks in the MSCI Emerging Markets Index from 1990 to 2021:
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Source: Is India Assuming Leadership in Emerging Markets?, The Emerging Markets Investor
When the index was created in 1990, the top 10 in the index looked a lot different than what they are in September 2021. India did not have any company in the top 10 in 1990. But today it has 2 companies among the top 10.
Among the next top 10 at the end of 2020, China had half the stocks. Now it has only two. Firms from Russia and India have taken over the spots.
The key takeaway is that today’s winners could become tomorrow’s losers or at least average performers. Hence investors need to build a diversified portfolio accordingly.
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