{"id":7305,"date":"2014-01-10T09:36:35","date_gmt":"2014-01-10T17:36:35","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=7305"},"modified":"2016-12-21T07:28:14","modified_gmt":"2016-12-21T15:28:14","slug":"invest-emerging-markets","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/invest-emerging-markets\/","title":{"rendered":"How to Invest In Emerging Markets"},"content":{"rendered":"

If you’ve been\u00a0investing\u00a0at all in the past 10 years, chances are you’ve heard someone say the “emerging\u00a0markets” are a good investment bet.<\/p>\n

And that’s largely true, with some caveats. Like any asset class, \u00a0you shouldn’t overdo it.\u00a0It’s important to take measured\u00a0investment risks<\/a>.<\/p>\n

\"emerging<\/a><\/p>\n

First, a definition: An “emerging” market is generally understood to be a high-growth developing country.\u00a0Nevertheless, emerging countries can be large. China is considered emerging, even though it’s the second-largest economy in the world. Brazil is emerging, as are India and Russia.<\/p>\n

What these countries have in common is high growth rates, often driven by export economies and consumption. Many have young populations, so the shift to urban consumer lifestyles results in greatly increased imports and, in time, greater domestic manufacturing.<\/p>\n

Here are some\u00a0retirement investing<\/a>\u00a0caveats when it comes to emerging\u00a0markets:<\/p>\n

1. Growth can be uneven<\/strong><\/p>\n

Like with small-cap stocks, emerging\u00a0markets\u00a0have their ups and downs. It’s nearly impossible to predict which year or run of years will provide excess returns and which year will be the disaster during which investors flee for safer shores. Once you decide how much\u00a0exposure to volatility<\/a>\u00a0you can handle, keep within those limits.<\/p>\n

2. Risks are difficult to measure<\/strong><\/p>\n

It’s hard to predict the medium-term fortunes of even the most staid of\u00a0U.S. blue-chip stocks<\/a>, and here you have the advantage of timely public reporting. Emerging market companies do report results, but the interplay of regulation, market forces and competition are much harder to grasp from thousands of miles away.<\/p>\n

3. Currency comes into play<\/strong><\/p>\n

Corporations deal with this all the time: The foreign subsidiary had an off year, but the exchange rate means more dollars once those profits are repatriated. Or, possibly, a good year is weaker thanks to currency shifts the other direction. All of this will affect your return, and predicting those outcomes is beyond even rocket scientists.<\/p>\n

4. Political risk is greater<\/strong><\/p>\n

Emerging markets<\/a>\u00a0profits through the roof? A single election can change that overnight. Incoming governments can hike taxes and change policies dramatically. Domestic monetary policy is a factor as well, and broadly unknowable until it’s too late to act.<\/p>\n

5.\u00a0Markets\u00a0are less liquid<\/strong><\/p>\n

The really powerful thing about investing in the major world\u00a0markets\u00a0is that you are not alone. Millions upon millions of individuals and institutional buyers and sellers keep prices stable during trading hours. If you invest in an emerging market, the ride can be a bit bumpier.<\/p>\n

Bottom line: Invest in emerging\u00a0markets, but do so through\u00a0U.S.-based\u00a0ETFs<\/a>\u00a0that help you limit the aforementioned risks. Make sure your exposure is in line with your long-term\u00a0retirement portfolio plan<\/a>.<\/p>\n

Finally, strive to avoid “playing” countries. Instead,\u00a0rebalance<\/a>\u00a0along the way to capture gains as they happen in a timely fashion.<\/p>\n","protected":false},"excerpt":{"rendered":"

If you’ve been\u00a0investing\u00a0at all in the past 10 years, chances are you’ve heard someone say the “emerging\u00a0markets” are a good investment bet. And that’s largely true, with some caveats. Like … Read more →<\/span><\/a><\/p>\n","protected":false},"author":8,"featured_media":7307,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_wp_rev_ctl_limit":""},"categories":[4],"tags":[62,42,43],"yoast_head":"\nHow to Invest In Emerging Markets | MarketRiders<\/title>\n<meta name=\"description\" content=\"Chances are you've heard someone say the "emerging markets" are a good investment bet. 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