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Surprises Galore in Boring Old Emerging-Markets Funds

Even straightforward stock portfolios can take vastly different approaches.

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In recent years, fund companies have created a variety of new ways for investors to gain exposure to emerging markets. We've written extensively about the different approaches. For example, we've discussed the emergence of funds that focus on so-called "frontier" markets, as well as those that specifically target emerging-markets small caps. We've also paid attention to the rise of funds that take the traditional balanced or multiasset approach and apply it to the emerging-markets universe and those that fill their portfolios with bonds denominated in local emerging-markets currencies.

Amid all of the new options, though, the more-traditional type of emerging-markets fund remains a viable choice. But it's important to recognize that even these old standbys provide a wide variety of approaches for investors. In fact, straightforward emerging-markets stock funds sometimes have little in common with one another. Because distinctions in a fund's makeup and strategy have important effects on performance, and certain approaches may not match an investor's preference, it's important to discern and understand the differences before investing.

Gregg Wolper does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.