Comparing risk and reward (Sharpe ratio)

Net Zero Tracker

Investments in developed markets have enjoyed higher risk-adjusted returns compared with investments in emerging and frontier markets in recent decades. Investments in developed markets also entail less risk to achieve the same reward (reflected in superior Sharpe ratios, a measure of the trade-off between the two) than investments in emerging and frontier markets, highlighting their appeal for global investors.

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Source: MSCI ESG Research, data as of Sept. 30, 2024, based on listed equities. Regions represented by the MSCI World Investable Market Index, the MSCI Emerging Markets Index, and the MSCI Frontier Markets Investable Market Index.