Not All Emerging Markets Equal

If you want emerging-market exposure that goes beyond owning one broad-based ETF or open-end fund, you need to be aware that not all emerging markets are the same.

Some rely on exporting consumer goods to the U.S., some on exporting commodities to China and similar countries. Some are obvious growth stories, like India and China, and some are smaller countries that have a lot going for them, but have growing pains.

Understanding those differences will be crucial the next time there is a nasty correction in this market segment.

For example, if all you owned in 1997 were southeast Asian countries, you got hit hard relative to the widespread emerging-market pain that went with the Asian contagion. ...