Part 1 and Part 2 of this series started our tour through some of the top emerging-market funds available. Here, we wrap up with two more top-notch candidates.

Templeton Institutional Emerging Markets (TEEMX)
This Franklin Templeton fund is run by three portfolio managers: Mark Mobius, Tom Wu, and Dennis Lim. Mobius and Wu have worked with the fund since its inception in 1993, while Lim joined the management team the following year. Templeton follows a value-oriented investment philosophy, seeking out foreign companies with a wide margin of safety relative to the value of their estimated future earnings. This approach means that the fund will lag in more growth-led market environments, but hold up better during market downturns.

The fund invests across sectors, and it's currently positioned more heavily in financial services (20% of assets) and energy (19%). Top holdings include oil firm PetroChina (NYSE:PTR) and Taiwan Semiconductor (NYSE:TSM). Fund performance has been a bit more subdued than some of our other fund candidates, but this Templeton fund still gets the job done. The fund has garnered a five-year annualized return of 28.6%, edging out the MSCI Emerging Markets benchmark's 27%. The fund's performance lagged a bit in 2005 and 2006, but investors shouldn't worry too much -- the longer-term picture here is quite bright. One final note: This fund carries a $1 million minimum, placing it out of most investors' reach. However, if your retirement plan offers this fund, you'll most likely be able to enjoy its benefits without that whopping minimum requirement.

Vanguard Emerging Markets Index (VEIEX)
Our last winner is an index fund designed to track the MSCI Emerging Markets Index. It won't beat the pants off of the market, but it won't fall short, either. Vanguard's Duane Kelly has run the Emerging Markets Index for the past 12 years. This fund currently has a 73% allocation to large-cap foreign stocks, 21% to mid caps, and 7% in small caps, in line with the benchmark. Right now, allocations to South Korea (15% of assets), Taiwan (12%), and Hong Kong (11%) account for the fund's largest country weightings.

As expected, the fund's performance closely tracks that of its benchmark. Vanguard used a custom emerging-market benchmark as its bogey before switching to the actual MSCI Index last August. Because of this, the fund has actually beaten its benchmark by nearly 3% over the past five years, with an annualized return of 29.7% through June. Its peer-group rankings are typical for an index fund, landing in the middle of the category for most calendar years. In my opinion, Vanguard has some of the best index funds around, and this one is no exception. If you want a cheap entry into emerging markets (with a 0.42% expense ratio) and you're content just to track the market, this is the fund for you.

A final disclaimer
If you decide that an emerging-market fund is up your alley, make sure you're using it correctly in your portfolio. Ideally, you should have roughly 65% to 85% of your international exposure in developed foreign funds, with only the remainder in emerging markets. Also, remember that this segment of the market is very volatile. Wide swings in performance shouldn't surprise you.

Lastly, consider that emerging markets have been one of the hottest-performing areas of the market for the past several years. These red-hot returns are extremely unlikely to continue in the coming years. A potential correction is also not out of the question. At the very least, it's likely that emerging markets have already run their course. You shouldn't buy into one of these funds expecting another three years of 25% or greater returns. Temper your expectations going forward, remember to think long-term, and you'll have a smooth trip into the realm of emerging markets.

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Fool contributor Amanda Kish lives in Rochester, N.Y., and does not own shares of any of the companies or funds mentioned herein. The Fool's disclosure policy is a citizen of the world.