Seeking silver linings in emerging markets

[NEW YORK] In a quarter in which most stock funds eked out small gains, emerging-market equity portfolios couldn't even manage that much.

Funds that invest broadly in the developing world fell 0.6 per cent in the quarter while Asia-Pacific portfolios sank more than 2 per cent, and Chinese-region funds dropped 5 per cent.

The results weren't unexpected. It wasn't just that China's economy appeared to be slowing even more than was previously thought. Starting in late February - when pro-Russian forces began taking control of the Crimean peninsula, leading to Moscow's annexation of that part of Ukraine - Russian stocks lost as much as a fifth of their value, and the group ended the quarter down roughly 14 per cent. Now there are growing concerns that Western sanctions and rising borrowing costs could push Russia into a recession.