Date of Completion

Spring 5-8-2011

Thesis Advisor(s)

James Sfiridis


Business | Finance and Financial Management


This thesis explores the role of emerging markets in investment portfolios. Could an investment portfolio consisting of emerging market securities have outperformed similar portfolios that did not contain emerging markets over recent years? Gathering data from January 1, 2009 to December 31, 2010, mean-variance efficiency and the efficient frontier were used to compare the risk-return tradeoff for six constructed portfolios comprised of emerging markets, developed markets, and the risk-free asset. Brazil, Russia, India, and China were chosen to represent the emerging market allocation of the portfolios, accomplished by working with a BRIC Exchange Traded Fund (ETF). The S&P 500 was used to represent the U.S. equity market, a European ETF was used as an alternative developed market, and U.S. treasuries served as a proxy for the risk-free asset. I found that the diversification benefits of emerging market securities significantly improved the risk-return tradeoff of investment portfolios over the holding period of the study.