The MSCI Emerging Markets ETF (EEM) has been surging over the last week after it broke out above its Fall trading range. Ā Don't look now, but EEM is now outperforming the S&P 500-tracking SPY ETF in 2012. Ā EEM is currently up 14.07% year to date versus a YTD gain of 14.02% for SPY.
As shown in the second chart below, emerging markets got off to a great start to the year but then fell apart during the eurozone crisis in the Spring and early Summer. Ā As emerging markets faded in the middle part of the year, the US held up relatively well. Ā In the fourth quarter, however, we've seen the US struggle while emerging markets have soared.
With just 5 basis points separating the two in terms of year-to-date performance, it's going to be a race to the finish line over the next two weeks.
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