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The Short Answer

How Much Emerging-Markets Exposure Do You Need? (And Do You Already Have It?)

Emerging markets are hot, and here are some benchmarks to ensure you don't go overboard.

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Note: This article is part of Morningstar's December 2013 Emerging-Markets Week special report.

If you've been keeping an eye on flows into mutual funds for the past few years, you may have observed a curious trend. Even though emerging-markets stock and bond funds have posted weak near-term returns, investors have been flocking to each category. That behavior runs counter to the one we typically observe, as investor dollars typically run away from--not toward--investment types with poor recent returns. (Exhibit A: As interest-rate jitters have roiled the bond market, investors have been redeeming their shares in high-quality intermediate-term bond funds.)

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