The Daily Screen: The Best Emerging Market Funds

Emerging markets funds are getting whacked this year, but if you're looking for some diversification from the U.S. market and don't mind a hefty dollop of risk, they might be worth a look.

This pack of aggressive funds primarily invests in stocks of companies based in Latin America and Asia, and is the international fund category's equivalent of a home-run swing. The funds can post huge gains; the average emerging markets fund gained 72% last year. These funds also provide diversification because many of the smaller companies in these markets don't tend to rise and fall with U.S. stocks.

That said, these funds invest in some fairly shaky markets. For instance, the average emerging markets fund finished the year down five times during the 1990s. Even after last year's steep gains -- coming on the heels of two down years -- these funds' returns don't compare well with the U.S. market, trailing the S&P 500 over the last one-, five-, and 10-year periods, according to Morningstar. ...