The term emerging market economy typically refers to a country with social or business activity that is in a state of rapid growth or industrialization. The most commonly cited emerging market economies are Brazil, Russia, India, and China. Other large emerging economies include Mexico, Egypt, and Turkey. Combined the world’s emerging market economies account for roughly 50% of total economic activity and represent approximately 80% of global population.

Investors who want to participate in these emerging opportunities have a few choices:

1. They can pick individual companies many of which trade American depository receipts on US stock exchanges.
2. They may also consider mutual funds with investment objectives that focus on emerging markets.
3. Another approach is exchange traded funds which focus on a particular country or region.

Emerging economies have considerable risks but may also offer significant long-term growth potential. Should you allocate a portion of your portfolio in emerging markets?

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