Investors should consider placing their money into emerging markets because they have strong economic ground rules and because they are great for diversifying portfolios, according to News Today.

"Historically, the growth of emerging markets has been extremely correlated with the global economic cycle, but one of the things we have seen over the last five to six years is the degree of decoupling from the global economic cycle," said Allan Conway, head of emerging market equities at Schroder Investment Management.

Exports from countries like Taiwan, South Korea and Southeast Asian nations to China double from 8% in 2000 to 16% in 2004, surpassing what they exported to the U.S. last year, according to a report from Goldman Sachs.

"As of today, foreign debt as a percentage of GDP is lower than in the developed countries. They've all gone into trade surpluses," Conway said. He added, "Hyper-inflation in Argentina and Brazil is gone; it's history."

Conway pointed out that the fact that these countries have good risk-return ratios and that their stock markets are declining in volatility are among other reasons that investors should consider investing in emerging markets.

"We had $3.5 billion of emerging markets equity last year. As of today, we have $8 billion under management," Conway pointed out.

Nonetheless, potential investors should invest with moderation, given the fact that a lot of "hot money" has been pouring into emerging market stocks and funds, driving up their price.

"We actually need and want to have a setback in these markets because they have been pushed too far too quickly," Conway concluded.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.