For a while earlier this year, stocks in emerging markets looked like the worst idea in the world. After falling by nearly 5 percent in 2013, the benchmark MSCI Emerging Markets Index plunged by another 6.6 percent in January of this year, off the bad economic and political news coming out of places like Russia and China.
But this asset class has staged a remarkable comeback this year. The MSCI index was up by right around 3 percent in both February and March. After holding steady in April, it was up another 3 percent in May. All told, for 2014, the emerging markets have appreciated by about 2.5 percent, even after that disastrous January.
And investors have been responding. For ten straight months, emerging markets mutual funds had reported net outflows - until they added a net $13.2 billion over the course of April and May.
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