Figure 1: Emerging markets have zigged and zagged
Indices: Fama/French Total US, International, Emerging Markets indices. Period: 01/07/1989 – 31/05/25. Returns in GBP.
Diversification: The Antidote to Regret
A well-diversified global portfolio, one that includes both developed and emerging markets, helps manage the risk of any one region performing poorly. It reduces reliance on a single sector or economy and increases the likelihood of capturing returns wherever they arise.
Diversification is the antidote to both FOMO (Fear of Missing Out) and regret. No one knows which region will lead next year, but by staying invested in a broad mix of markets, your portfolio is always in the race, even when leadership changes.
Figure 2: Diversification mitigates poor outcomes in any one region
Period: 01/01/2010 – 31/12/24. Returns in GBP.
How This Supports Your Wealth Plan
Your portfolio isn’t just a collection of investments. It’s the engine that powers your wealth plan, which, in turn, is designed to help you:
- Retire with peace of mind
- Support loved ones or pass on wealth meaningfully
- Fund life experiences that matter to you
- Contribute to causes that reflect your values
At Wells Gibson, every part of your portfolio plays a role in that bigger picture. Including emerging markets means:
- Spreading risk so your future isn’t tied to one region
- Capturing opportunity in some of the world’s fastest-growing economies
- Enhancing resilience in a volatile global environment
At Wells Gibson, we believe your portfolio should reflect your life goals, not market noise. We invest across the globe not because every region will outperform every year, but because true wealth requires resilience, patience, and a clear sense of purpose.
Stay the Course, Stay Purposeful
It’s easy to second-guess investments that haven’t recently outperformed. But investing with purpose means looking beyond the noise. It means trusting in a disciplined process that’s designed to support your long-term goals, not react to short-term swings.
Emerging markets remain a vital part of a well-constructed portfolio. They offer a risk premium, diversification benefits, and access to global growth. Their recent underperformance doesn’t invalidate their importance; it reinforces the need to stay the course.
If you’d like to revisit your wealth plan, review your investment positioning, or simply gain reassurance about your long-term strategy, we’re here to support you.
At Wells Gibson, we believe in clarity over complexity, and that true wealth is not just about what you own, but what it enables you to do and become. Your plan is more than numbers. It’s about purpose.
Trusted client partnerships built on purposeful wealth planning and sensible investing.
Important notes
This is a purely educational document to discuss some general investment related issues. It does not in any way constitute investment advice or arranging investments. It is for information purposes only; any information contained within them is the opinion of the authors, which can change without notice. Past financial performance is no guarantee of future results.
Products referred to in this document
Where specific products are referred to in this document, it is solely to provide educational insight into the topic being discussed. Any analysis undertaken does not represent due diligence on or recommendation of any product under any circumstances and should not be construed as such.
After more than a decade where US stock markets have led the charge, it’s natural to question the role of emerging markets in your portfolio. These parts of the world, think India, Brazil, Southeast Asia, and beyond may not have delivered standout returns in recent years.
So why do we still include them?
At Wells Gibson, this question goes right to the heart of long-term, purposeful financial planning. Because while recent performance can grab headlines, it’s not the foundation of a resilient portfolio, nor the key to achieving your life goals.
Looking Beyond Recent Winners
It’s easy to forget, in the shadow of US stock market dominance, that investing is not about chasing what has just done well, but about building a portfolio that is robust across a wide range of possible futures.
Emerging markets have lagged behind developed markets, particularly the US, over the past decade. That underperformance might tempt some investors to question their place. But in reality, this is exactly why they remain essential.
Risk and Reward Go Hand in Hand
Emerging markets carry higher risks, political, economic, and governance-related. But they also offer the potential for higher long-term returns. This relationship between risk and reward is fundamental to investing.
Since July 1989, emerging markets have delivered around 0.7% per year more than developed markets (in GBP). That may seem modest, but over decades, it compounds significantly. These returns, however, don’t come in a straight line. In fact, emerging markets are more volatile than their developed peers.
They can detract from performance in some years and add significantly in others. But for those who remain invested through the ups and downs, the long-term rewards are real. It’s about patience, not prediction.
