Above is a quick chart of the returns of $SPY, $EEM, and $EFA, using Portfolio Visualizer. It’s just mind-boggling that the equity prices of the emerging markets could shoot thru the roof in the 2000s while that of the US moved up little, while nowadays the US equity is taking off and leaving that of emerging markets behind.
Emerging markets are “higher risk higher reward”. The magnitude of the emerging markets’ swings is far larger than what you see in the developed markets. The intuitive logic is this: there is a lot more room for efficiency improvements in those economies and they have the potential for explosive growth, but the governments are also less established and it’s more likely for political corruption and other turmoil to impede growth.
All of this means that they’re more likely to shoot to the moon and also more likely to crash back down to earth than the developed markets.