Despite excitement surrounding investing in emerging markets, many industry observers worry the sector won't be able to measure up to expectations.

While some are confident that investment opportunities in emerging markets, such as China and India, will continue to grow exponentially, others point out that expectations may be higher than growth.

“There is pessimism around international investing because there are many issues to face in the global economy,” said Daniel O’Keefe of Artisan Partners. “Developed world governments are overleveraged and are confronting the inevitability of austerity measures, which will have a depressive impact on economic growth. This creates an environment of fear. People are so focused on the problems of the developed world their default mechanism is to go to emerging markets where the expectation is that they will continue to grow. There is as much risk if not more for stocks in emerging markets.”

O’Keefe said where a company is listed does not necessarily reflect where it invests its money. A U.S. company can invest primarily overseas, yet still be considered a domestic company. It is important to look at where a company’s revenues are generated.

“It makes more sense than ever to invest with a global manager that is able to make the best decisions of where to invest globally,” he said.

Mark Yockey of Artisan Funds is more optimistic about international opportunities. “Opportunities in Europe are getting better and better everyday,” he said. “International investing is like domestic investing-invest in good companies and don’t pay too much for them and you’re fine.

Meanwhile, Brent Lynn of Janus said during a session on foreign stock picking at the recent Morningstar 2010 Investment Conference that although China is a “juggernaut,” he sees more opportunity in India if only because it is further behind the curve in terms of growth.

Ryan W. Kruger a partner at Hamilton Financial Partners in Tulsa, and an attendee at the conference, was surprised that some of the fund managers warned that emerging markets will not meet expectations.

“Overall people say there are good opportunities but there are still risks of results versus expectations,” he said. “While we’re not sitting on the sidelines in terms of emerging markets, we are deciding whether to dial up or dial down our investments.”