If you've been reading the newspapers or watching the news on TV, you probably haven't missed the reports all but sticking a fork in emerging market exchange traded funds (ETFs). But is it really so dire?
Yes, investors have pulled a large amount of cash out of emerging markets in recent weeks.
Okay, sure…it's also true that emerging market ETFs haven't been performing all that great lately - at least, not when you consider how they've done in years past. [ Emerging Markets ETFs: Time to Write Them Off. ]
And inflation isn't just a U.S. concern - emerging markets may have to contend with the rising cost of food sooner than later.
Is it really fair to proclaim, then, that emerging market ETFs are finito ?
Gary Gordon for the Street points out this simple fact: emerging market citizens spend a larger percentage of the disposable income on food and energy than those who live in developed countries. Despite that, however, the quickly-rising costs of food haven't hurt emerging market stock markets as much as many thought they would. [ Sentiment Changes Toward Emerging Markets ETFs. ]
The performance of many countries in the wake of the recession should have taught us this: emerging markets are resilient and capable of recovering at a rate that can surprise even the most hardened skeptic.
Could we still see flat performance and investor exodus? Yes, but the long-term growth story of emerging markets hasn't ended.
Tisha Guerrero contributed to this article.