Why have emerging markets become less risky than developed markets?

Using Axioma’s factor risk models, Qontigo’s Applied Research team has tracked the risk ratio between the STOXX^® Emerging Markets 1500 Index and the STOXX^® Global 1800 Index for years. Throughout 2022 and into 2023, the EM gauge has shown lower forecast and realized volatility than the global DM benchmark. Although the ratio has inverted for a few days or weeks from time to time, this is the longest sustained inversion we have seen in data extending back to 2006. A new whitepaper investigates the drivers of this anomaly.