Emerging Market funds focus on the cap-weighted companies of up-and-coming countries not yet considered fully developed. They are popular in many portfolios as a source of perceived growth and as a potential hedge against correlated stock struggles of developed countries.
Emerging market funds hold a wide variety of countries, but the most important four are sometimes also referred to as the BRIC countries:
Emerging markets are quite volatile and are generally considered riskier than developed markets. While they may backtest well, investors should be careful about overloading their portfolios based on averages alone.