A Safer Way to Play Euro Emerging Markets

This column was originally published on RealMoney on Sept. 2 at 10:13 a.m. EST. It's being republished as a bonus for TheStreet.com readers.

Unless you have been vacationing on a remote island for the last couple of years, you no doubt know there has been a resurgence in emerging-markets investing. We have seen the formation of new ETFs, a resurgence in demand for closed-end funds that invest in emerging markets and even the creation of neat acronyms, like B.R.I.C. (which stands for Brazil, Russia, India and China).

If you care about having a diversified portfolio, you need to learn about emerging markets. Clearly, those that have looked abroad may have reached the reasonable conclusion that emerging markets are too volatile. After all, the history of this asset class has been one of feast or famine.

In 1997, the world suffered through the Asian contagion and one year later Russia defaulted on a portion of its debt. While it has been a while since the Mexican peso crisis of the mid-1990s, would anyone be truly shocked if a country in Latin America had a blowup of some sort? However, emerging markets have a long track record offering very good returns with a low correlation to the U.S. stock market. ...