By Ben Levisohn

From 2001 through 2010, emerging markets left the S&P 500 (SPY ) in the dust. The MSCI Emerging Markets Index gained 350% to the S&P 500s 4.7% drop. And investors got a boost from the falling U.S. dollar, lost 29% during that period against a basket of developed-market currencies.

REUTERS

These days, however, emerging markets are struggling. while the S&P 500 is surging. And investors cant even count rising emerging-market currencies to help ease the pain. Heres Bespoke Investment Groups take on the impact of currencies on international stock returns from an article posted yesterday:

The US has been the fifth best performing country in 2013 using local currency returns, but it has been the third best when adjusted for the move in the Dollar.  Japans Nikkei 225 is up a whopping 17.74% in local currency, but when adjusted for the big drop the Yen has seen, it is up just 6.30%.  Not bad, but not great either.  The UKs FTSE-100 is also up significantly in local currency terms with a gain of 9.83%, but it is nearly flat (0.88%) when adjusting for the drop in the Pound.  South Africa is another country that has been impacted negatively by a drop in its currency.  In local currency, South Africas stock market is up 4.41%, but its down nearly that much (-4.38%) in Dollar terms.

For U.S. investors, its the dollar returns that matterand thats been a problem so far this year. Some of the best performing stock markets have been in nations with weak currencies, while the strongest currencies have been in nations with weak stock markets.

According to Bespoke, Taiwans TWSE Index has gained 3.84% this year in local terms, but only 1.46% when accounting for the dollars rise.  South Africas FTSE/JSE Top 40 Index. meanwhile, has gained 4.41% in local terms, but has dropped 4.38% when accounting for the rands plunge this year. The theres Mexicos Bolsa index. which has dropped 0.72% this year, but has gained 3.01% when accounting for the stronger peso. Indias Sensex has dropped 0.33% this year, but has gained 0.41% because of the stronger rupee.

And that doesnt include the impact of fees and other factors that can eat into investor returns. The MSCI Emerging Markets Index for instance, has gained 0.3% in local currency terms including reinvested dividends, but has dropped 0.4% in dollar terms. The iShares MSCI Emerging Markets Index (EEM ) exchange-traded fund, however, has dropped 2.7%.

And investors should be particularly careful in some hotbut smallemerging stock markets. The MSCI Indonesia Investable Market Index. for instance, has gained 11.6%% this year, while investors in the iShares MSCI Indonesia Investable Market Index ETF (EIDO ) have gained 11.5%. The MSCI Philippines Investable Market Index has returned 17.8%, to the iShares MSCI Indonesia Investable Market Index ETFs (EPHE ) 16.6% return.

That might not seem like much now, but it will when they inevitably plunge.

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