MSCI Emerging Markets, the flagship benchmark for developing-world equities, tracks large- and mid-cap stocks across 24 emerging-market countries—thereby covering about 85 % of each local market’s free-float capitalisation and consequently serving as the core yard-stick for EM equity portfolios worldwide. Accordingly, the MSCI Emerging Markets Index offers investors a single, rules-based snapshot of the asset class’s shifting geography and sector mix.
1. Snapshot (May 2025)
Metric
Value
Transition Note
Constituents
~1 370 stocks
To begin with, breadth spans every major EM bourse.
Market Cap
US $6.3 trillion
Meanwhile, depth rivals mid-size developed indices.
Country Count
24
Thus, diversification stretches from Asia to LatAm.
Developed / EM Split (ACWI)
11 % EM, 89 % DM
Accordingly, EM weight still punches below potential GDP share.
MSCI EM universe list (e.g., China, India, Brazil, Saudi Arabia)
First and foremost, eligibility is country-driven.
Size Cut-off
Top 85 % of free-float value (large + mid caps)
Consequently, smaller names shift to MSCI EM SC.
Liquidity Screen
12-month turnover above MSCI thresholds
Hence, investibility remains high.
Foreign Ownership
Adjusted for limits and float factors
Moreover, hard caps trim opaque stakes.
Rebalance
Quarterly (Feb, May, Aug, Nov); semi-annual full reviews in May & Nov
Ultimately, the MSCI Emerging Markets universe stays current.
3. Regional & Sector Weights (April 2025)
Region
Weight*
Top Sector
Transition Note
China A + HK
27 %
Internet / Consumer
Chiefly, policy drives sentiment.
India
19 %
Financials
Meanwhile, domestic credit deepens.
Taiwan
15 %
Semiconductors
Additionally, chip cycles sway EPS.
South Korea
12 %
Tech Hardware
Likewise, memory pricing matters.
Brazil
5 %
Materials / Energy
Thus, commodities hedge inflation.
Others (19 mkts)
22 %
Banks, Materials
Collectively, they diversify shock risk.
*Float-adjusted; single-stock cap ≈ 5 %. Because China and India together exceed 45 %, concentration risk is material—nevertheless, the MSCI Emerging Markets Index still captures meaningful breadth.
4. Performance (USD)
Year
Total Return
Driver
Transition Note
2022
–20.1 %
Dollar strength, China lockdowns
Initially, macro headwinds dominated.
2023
+9.8 %
India tech rally, commodity bounce
Subsequently, sentiment recovered.
2024
+8.6 %
AI hardware, EM rate cuts
Moreover, policy easing supported risk.
YTD 2025
+4.5 %
Weaker USD, fiscal stimulus in Asia
So far, currency tailwinds aid returns.
Five-year annualised return sits at 4.1 % with volatility of 18 %—therefore, risk-adjusted metrics remain moderate.
5. Why Investors Use MSCI Emerging Markets
Core EM Beta. One index captures 85 % of investible EM float; consequently, allocation is streamlined.
Benchmarking. Active EM funds gauge alpha versus this neutral base; thus, performance attribution is clear.
Asset Allocation. CIOs embed country and sector weights into top-down models; hence, the index shapes capital-market assumptions.
6. Strengths & Caveats
Strengths
Caveats
Transparent, rules-based with 30-year history.
However, China + India > 45 % weight raises concentration.
Quarterly reviews keep the universe fresh.
Excludes frontier markets and most small caps.
Free-float factors improve investibility.
Foreign-ownership limits can underweight certain sectors.
7. Upcoming Developments
China A-Share Inclusion Phase 3 could lift mainland weight toward 32 % by 2027; therefore, investors must monitor policy shifts.
Saudi Tadawul Additionsmay expand Middle-East share above 5 %, consequently diversifying energy exposure.
ESG & Climate Variants are gaining flows—the MSCI Emerging Markets Climate Paris Aligned version launched in 2024.
Digital Tokens. Pilot on-chain index units slated for late 2025 aim to shorten settlement, thereby enhancing liquidity.
Key Takeaways
The MSCI Emerging Markets Index aggregates ~1 370 large- and mid-cap stocks across 24 economies, yielding 2.6 %. Ultimately, China, India, Taiwan, and Korea dominate, making tech and consumer sectors primary drivers. Used worldwide for EM benchmarking, ETFs, and strategic allocation, the MSCI Emerging Markets Index remains indispensable—yet investors should keep an eye on country-weight shifts, FX moves, and ongoing inclusion cycles.
