The REAL Face of EMF's

"The world has emerged faster than our understanding of world markets has emerged."

That, from an article on Investopedia.com*, is an undeniable truth. In one sense, it is unfortunate how little most people, even veteran financiers, truly know about the real and sound potential in emerging market funds.

In another sense, however, this can been seen as an opportunity for those of us inclined and able to learn and understand these funds. More from the article:

"With the astounding growth that is happening in emerging markets, it is surprising that, as an asset class, they play a relatively small role in most U.S. investment portfolios - institutional and retail alike."

A commonly-accepted rule of thumb for emerging market exposure is to cap investments at 5%. The article insinuates, and I agree, that this rule is arbitrarily derived and thus may be outdated. In recent years, emerging market funds have grown considerably in average return to investors and have generally lessened in volatility, though let it be known that EMF's are, comparatively, a relatively volatile investment inherently. And that, my friends, is what makes them so appealing.

I'll leave you with this thought: "Part of what makes investing a challenge is that we have to avoid getting caught in a mind-set that doesn't keep pace with the evolving realities of the capital markets. Markets sometimes behave like geological tectonic plates - they can creep along for years undisturbed and then suddenly collide and create tremendous disruptions. These tectonic events affect a large amount of global wealth. Understanding how to make sense of them is a critical factor to achieving investment success."

*http://www.investopedia.com/articles/07/emerging_markets.asp