Money Matters: Is the Emerging Markets Craze Over?
See whether you don't already get sufficient exposure to the emerging markets through your plain-vanilla foreign stock funds. According to the fund tracker Lipper, the average general foreign stock fund invests around 20 percent of its assets in the emerging markets, either directly or indirectly. This means that if you hold 25 percent of your portfolio in broad-based foreign stock funds, chances are you're already investing 5 percent of your total portfolio in the emerging markets.
Consider playing the emerging markets through Europe. Richard Bernstein, chief investment strategist for Merrill Lynch, says a safer way to play the emerging markets is to invest in European stocks. "We believe that the shares of European companies that export to emerging market consumers offer a good way to participate in that small but fast-growing segment of the global economy," he says. He's right. According to the fund tracker Morningstar, there has been an 87 percent correlation over the past three years between the performance of European stock funds and emerging markets portfolios.
More Money Matters:
• The Lure of Emerging Markets
• The Emerging Markets Bull Run
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