This article has been adapted from our sister site across the pond, Fool U.K.

We've tramped across every emerging market on The Fool this year, from Latin America to Africa to Russia and all points in between.

And we've hardly been alone in doing so. Emerging markets are a big theme of post-credit crisis investing. Numerous emerging countries' indices rose 100% or more from the March 2009 trough as investors anticipated superior GDP growth, and emerging markets have outperformed the developed ones over one, five, and 10 years.

Indeed, some already see an emerging markets bubble being inflated. Average P/E ratios have risen fast, and many emerging markets will look expensive should growth prove weaker than expected.

Bubble buster
Speaking this week at his employer's Franklin Templeton Emerging Markets Conference, Dr. Mark Mobius, the sector expert and executive chairman of Templeton Asset Management, aimed to deflate talk of an emerging market bubble.

One reason investors are jumpy is because emerging market crashes seem to come along even more regularly than the proverbial buses -- most recently in 1998, 2001, and 2008. Dr. Mobius says:

The interesting point is that each of these was short in duration while the bull markets have been very long. The average emerging markets bull market has produced an increase in prices of 423% and lasted 69 months, whereas emerging markets bear markets last 14 months and move prices down by only 57% on average.

These statistics should give pause for thought to bubble theorists -- but I'm less convinced by Dr. Mobius' other two arguments.

First, he notes emerging market initial public offerings will have had their best year since 2007 by the time 2010 is done; it's expected that $144 billion will be raised, compared to the $180 billion in 2007.

"We have seen a high correlation between stock prices and the amount of IPOs," he said, adding that emerging market IPOs now make up over 70% of the worldwide annual total.

Mobius also notes that institutional investors typically hold just 3%-8% of their portfolio in emerging markets, even though they make up 32% of the world's total stock market capitalization. Growing demand from institutions might therefore push prices higher.

The problem I have with both of these theories is in essence they are saying the buoyant market will be driven by ... the buoyant market! That's the sort of bubbly thinking that eventually leads to speculation.

I definitely agree, though, that institutions are taking more interest in emerging markets. In fact, one way to play the theme is to buy emerging market funds!

Fundamentally positive
It would be grossly unfair to paint Dr. Mobius as a cheerleader for emerging markets from a purely technical perspective, anyway. He also shakes his pompoms for the view that emerging market's demographics and their relatively robust financial systems mean they will grow while the West stagnates.

His colleague at Franklin Templeton Investments, Michael Hasenstab, puts it bluntly: "I would argue that the safe assets have been flipped around. We are seeing more safe havens in many emerging markets now."

Western companies are still short of capital because the Western banking system remains clogged, Hasenstab says, particularly in Europe. Also, the huge public debts in most developed countries will be a drag on growth and employment for years to come.

In contrast, regions such as Asia entered the financial crisis with little debt and bounced back faster, while some countries perceived as basket cases such as Hungary are at least confronting their fiscal problems. "In the U.S., we can only dream about what they have done, particularly in terms of social security reform where they have applied some really tough measures," he says.

Some other positive nuggets shared by the chaps from Franklin Templeton:

  • There are 5.7 billion people living in emerging markets versus 1.2 billion in developed countries.
  • The growth rate of GDP/capita in emerging markets was 126% between 2003 and 2008, compared to 32% in developed markets.
  • Franklin Templeton Investments expects 5.4% average growth in emerging markets, against 3% in the U.S. and just 2% in Japan.
  • In 1990, 1% of Chinese households in rural areas had fridges, and this had only risen to 26% by 2007.
  • 5% of Chinese households had televisions in 1990. By 2007 the proportion was 94%.

Trusting the emerging market bulls
If you're persuaded by Mobius and Hasenstab's arguments, you can back their confidence by buying into the Templeton Emerging Markets Investment Trust. [Editor's note: U.S. investors have two closed-end funds at their disposal: Templeton Emerging Markets Fund (NYSE: EMF) and Templeton Emerging Markets Income Fund (NYSE: TEI), which focuses on bonds.]

The trust offers a straightforward way to get exposure to all the emerging regions of the world, although its allocation is not without the personal quirks you'd expect from an active manager. As of the end of May, for instance, the trust's biggest geographical bet was on Brazil, where it had 20% of its assets, putting Hong Kong/China into second place with 19.6%.

Third and fourth were India (14.2%) and Thailand (9%) -- the trust has been buying specifically on the political turmoil in the latter. Interestingly, Russia comes eighth, with 6% of Templeton's assets, despite its much-vaunted place in the BRIC quartet.

The sector spread of Templeton's investments is also worth noting -- over 50% is allocated to just two sectors, financial and energy. You're certainly not backing the overseas workshops that have hollowed out the West -- just 2.7% of the fund's assets are in the industrial sector.

Shares in the Templeton trust are still up 40% in the past 12 months, even after the recent weakness, compared to a 16% rise in the FTSE 100. Over five years they've risen 187%, versus an advance of just 2% for the U.K.'s top 100 companies, and the price has more than quadrupled over the past decade.

Of course, this is exactly the sort of outperformance that has prompted some commentators to look for signs that emerging markets might be in a bubble. And -- like a Mobius Strip -- that takes us back to where we started!

More from Fool U.K.'s Owain Bennallack:

Brian Richards prepared this article for publication on Brian does not own shares of any securities mentioned. Fool U.K. writer Owain Bennallack owns shares in the Templeton Emerging Markets Investment Trust. The Fool has a disclosure policy.