The Smarter Play in Emerging Marketshttp://www.fool.com/investing/international/2012/06/27/the-smarter-play-in-emerging-markets.aspx Dan Caplinger
June 27, 2012
Throughout the past decade, investors have turned to emerging-market stocks in a last-gasp effort to take advantage of strong economic growth. Those who did so managed to avoid the full extent of the Lost Decade for U.S. stocks.
Recently, though, many popular emerging-market investments have started to lose their luster. Yet even as those formerly hot stock markets cool off, you can still find pockets of strength in areas that could well continue to thrive even if overall growth continues to decelerate.
Looking outward vs. looking inward
The other thing that emerging market economies gave the developed world was a rich array of natural resources. Russian oil, natural gas, and precious metals have been a big driver not only of commodity prices worldwide but also for the resources Europe in particular needs in order to function efficiently. Similarly, Brazil provided energy and mineral wealth not only to the developed world but also to China and other emerging economies, as Vale's (NYSE: VALE ) status among the world's big miners attests.
Initial investment in emerging markets largely followed these priorities. So when you invest in the Vanguard MSCI Emerging Markets ETF (NYSE: VWO ) , you end up with a host of companies that are primarily aimed either at natural resources or at exports.
But that's not the only way to invest in emerging markets. And especially over the past year, it hasn't been the best way either.
Looking at the consumer