Growth prospects can be found in emerging markets, yet the investment in related shares and exchange traded funds (ETFs) also come with risk. Long-term investors who buy-and-hold must take a better diversified approach to this sector to protect their portfolios in the long run.

Do buy-and-hold investors who seek exposure to emerging markets have to just stomach the wild, volatile ride and stick to a 5% allocation in these regions?, asks Gary Gordon for ETF Expert.

There may be a middle ground for those faced with this decision. If an investor wants stronger exposure to these regions with a better upside potential, Gordon suggests that the best bet is to offset that risk with low-correlating and non-correlating investments.

It is up to you to do the research to see what ETF you’re holding, in order to ensure low correlations. Here are five ETFs that can help ease up emerging market fund risk, against iShares MSCI Emerging Market Index (EEM):

• iShares Aggregate Bond Fund (AGG): down 0.3% year-to-date; 0.40% correlation
• PowerShares VRDO Tax-Free Weekly (PVI): up 0.7% year-to-date; 0.05% correlation
• iShares NASDAQ Biotechnology (IBB): up 1.8% year-to-date; 0.68% correlation
• iShares Barclays MBS Bond (MBB): up 1.8% year-to-date; -0.32% correlation
• SPDR Gold Shares (GLD): up 6.8% year-to-date; 0.71% correlation

For more stories about emerging markets, visit our emerging markets cateogry.

Tags: AGG, Biotechnology, Bond ETFs, Commodity ETFs, Emerging Markets, ETF 101, GLD, Global ETFs, Gold, IBB, MBB, PVI, Sector ETFs