The emerging markets landscape changes frequently, as the economies of some countries begin to evolve and the economies of other countries mature. The following chart shows how those markets were distributed. Compared with established markets, emerging markets offer the potential for faster economic growth, and emerging markets stocks are sometimes more reasonably priced. But the risks of investing in these markets are substantial. Benefits of Emerging Markets Funds Potentially Higher Returns.
Rapid growth can produce impressive returns.
Broader Portfolio Diversification. Emerging markets vary widely, and they do not rise and fall in tandem with developed markets. Emerging markets historically have been more volatile than developed markets, and the value of your investment could fluctuate dramatically as the markets rise and fall. Because the prices of emerging markets stocks and U.S. stocks do not rise and fall in lockstep, your returns could lag your U.S. stock fund returns. Your returns could be reduced because the value of the U.S. dollar rises against foreign currencies.