For the last five years, early cyclicals have been the best performing group in the emerging markets as abundant credit flowed into these markets.  In the chart below, we show an equal-weighted basket of EM early cyclicals (consumer discretionary stocks).  These stocks have outperformed the broader MSCI Emerging Market index by 148% over the last five years.

The second best performing segment of the emerging markets has been the growth counter-cyclical basket of stocks, comprised of health care and consumer staple companies.  As shown in the chart below, these stocks have outperformed the MSCI EM index by 54% over the last five years.

The market reaction in the emerging markets today after the Fed meeting yesterday suggests investors are turning away from the early cyclical group of companies and turning toward the counter-cyclical areas.  Today, as shown in the table below, EM health care stocks are leading the performance table, up .7% while EM early cylicals are the worst performing group, down 1.7%.