Emerging market stocks became hot approximately three years ago, and it seems as though investors are finally noticing, as they poured $5.4 billion into diversified emerging markets fund in the last quarter of 2005, according The Wall Street Journal.

This is the second-largest amount of new money into these types of funds. In the first two months of 2006, investors shoveled in another $6.3 billion.

Money managers are beginning to warn investors, and those who aren't should start.

We've all heard the saying, "What goes up must come down," and managers are worried that the sector has reached a pinnacle and could come plummeting down at any given time.

"The highest level of assets comes in when a market is near its peak," said Kirk Henry, manager of the Dreyfus Premier Emerging Market Fund.

"There's now more money than opportunities out there," said Cameron Brandt, an analyst with emergingportfolio.com.

 Among other concerns are the rising interest rates. In the past, emerging markets have always been sensitive to any ripples in the U.S. economy, and this has not been the case thus far.

"We're not at the danger stage yet, but we are at danger of getting there - and history does repeat itself," said Mark Mobius, managing director of Templeton Asset Management.

Despite all this, long-term prospects for emerging markets are looking good, due to economic reform in countries such as Russia and Brazil.

The best thing to do is to gradually put money to work, rather than investing it all at once.

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.

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