Investing in the Globe's Emerging Bright Spots

Recent declines in emerging markets have spooked investors, but the long-term outlook remains solid.

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Global ripples. "Economic giants like China and India, with their increasing demand for commodities and natural resources, play a pivotal role for growth in the region. In Southeast Asia, countries like Thailand and Indonesia have seen very rapid growth in the last decade, and frontier markets like Vietnam and Laos, with their strong growth potential, are also very interesting to us," says Templeton's Mobius. "We are very interested in Indonesia, a large country with increasing per capita income. We have also seen a continuing evolution toward broader and deeper capital markets in Thailand."

[See 3 Reasons to Invest in the Frontier Markets.]

South Korea is dependent on foreign trade with established economies and growing emerging markets such as China; emerging-market partners buy 70 percent of Korea's exports.

"We see inflation, especially rising food prices, and higher interest rates as a few key risks to growth in Asia today," Mobius said. There are inflation risks in Brazil, China, and India, in particular, where prospects for higher interest rates to combat inflation remain. Brazil is expected to grow 4 percent this year. China's economy is advancing at a 9 percent clip, and India is growing at 7 percent.

But inflation, too, should be held back by slower global growth, says Wells. Important for investors is the fact that emerging-market central banks have some wiggle room with interest rates.

Here's a snapshot of U.S. News's top-ranked funds in the emerging markets category, beginning with the highest score. (See more on these funds and others here.)

DFA Emerging Markets Portfolio (DFEMX): up 0.6 percent year-to-date, up 19 percent over one year; 0.6 percent expense ratio; low risk rating within category; DFA also manages a top-ranked Emerging Markets Core Equity Fund (DFCEX) and an Emerging Markets Small Cap Portfolio (DEMSX).

Oppenheimer Developing Markets Fund (ODMAX): down 2.8 percent year-to-date, up 16.7 percent over one year; 1.35 percent expense ratio; below-average risk rating within category.

Lazard Funds Emerging Markets Equity Portfolio (LZEMX): down 0.4 percent year-to-date, up 13.9 percent over one year; 1.14 percent expense ratio; average risk rating within category.

Virtus Emerging Markets Opportunities Fund (HEMZX): up 6.3 percent year-to-date, up 21.7 percent over one year; 1.66 percent expense ratio; low risk rating within category.

Wasatch Emerging Markets Small Cap Fund (WAEMX): up 4.3 percent year-to-date, up 28.9 percent over one year; 2.06 percent expense ratio; high risk rating within category.