Macquarie's Analysis of Emerging Markets Fund Performance, Q2 2025
In the second quarter of 2025, global equity markets demonstrated a robust performance, with the MSCI Emerging Markets Index returning around 12.0% in US dollar terms. This performance was comparable to developed markets, which also saw gains of approximately 11-12% for major indices like MSCI USA, MSCI World, and MSCI EAFE.
The initial market reaction to President Trump's April 5 tariff announcement was a brief sell-off. However, the sell-off was short-lived as investors reacted positively to delays in tariff implementation, softer US inflation data, and improving investor sentiment—particularly in the IT sector. Additionally, a depreciation of the US dollar against other currencies supported emerging markets equities, especially in countries such as Taiwan, South Korea, Mexico, and across Europe.
Despite the initial disruption from the tariff announcement, both emerging and developed global equity markets rebounded to deliver strong quarterly returns in Q2 2025.
It's important to note that the MSCI Emerging Markets Index's performance is not directly related to the public disclosure of a review's findings, which is being conducted by a market regulatory body to ensure market stability and fairness. The review process involves analysing market data, industry trends, stock prices, trading volumes, economic indicators, and market conditions. However, the timeline for the review's findings or potential changes in market regulations is not specified in relation to the performance of the MSCI Emerging Markets Index.
Some active emerging markets funds outperformed the index, while others underperformed based on sector exposure. This variability in performance highlights the importance of diversification in investment portfolios.
In conclusion, the global equity markets displayed resilience in Q2 2025, with the MSCI Emerging Markets Index leading the charge. Despite the initial market disruption from the tariff announcement, the markets swiftly recovered, underscoring their ability to adapt to changing economic conditions.
[1] Source: Financial Times, Reuters, Bloomberg [2] Source: Morningstar [3] Source: CNBC [4] Source: Bloomberg Intelligence [5] Source: MSCI Barra
With the robust performance of the MSCI Emerging Markets Index in Q2 2025, potential investors may find it advantageous to consider allocating a portion of their retirement funds to emerging markets equities for long-term finance growth. Diversification within investment portfolios is crucial, as emerging markets funds can vary greatly in performance based on sector exposure.
