Investors should consider population growth in their emerging market country allocations, fund provider WisdomTree says.
Low population growth in Poland, Russia, Taiwan and Thailand weighs portfolio performance.
The four nations with the lowest developing-market growth account for 19.5% of the assets in the MSCI Emerging Markets index, on which the iShares MSCI Emerging Markets ETF (EEM), according to a WisdomTree post.
The highest growth has been noted in Indonesia, India, Malaysia and South Africa.
According to WisdomTree, which has indexes and funds designed to beat MSCI benchmarks, the WisdomTree Emerging Markets Consumer Growth Fund (EMCG), with 11.7% of its holdings in Poland, Russia, Taiwan and Thailand, reduces population-growth risk.
Furthermore, WisdomTree points to a study of emerging market population growth over the past 16 years that showed a basked of countries with the lowest growth underperformed the MSCI Emerging Markets index by one percentage point, and those with the highest growth outperformed by 3.5 points. Even those with middling growth -- South Korea, China, Brazil and Mexico -- outpaced the index by 2.5 points.
Read more at Barron’s.