A recent survey by asset manager Franklin Templeton found that despite 93 per cent of respondents using products made in emerging markets, only 11 per cent of them invested in them. The Foreign To Familiar report found that this is partly because of a lack of familiarity with and some misconceptions about these markets.
Franklin Templeton, which runs a number of emerging markets funds including Templeton Emerging Markets Investment Trust (TEM), also argues that people are missing out on potential investment returns by eschewing this part of equity markets. And there is a very strong investment case for emerging markets, in particular for growth, the arguments for which you can read about in our articles.
But investors need to factor in emerging markets' risk and volatility. So you should not invest in them if you have a short investment timescale and or a low-risk appetite. You should not invest in any equity investment if you cannot hold it for at least five years and, with emerging markets, preferably longer. This kind of asset needs time to grow and you should avoid drawing from investments when they have fallen in value.