Specifically, small-cap emerging market stocks focus more toward domestic consumption and the emerging middle-class in the developing world.
“Small-cap focus provides better diversification benefits relative to large caps, as small companies tend to have more exposure to local economies and customers,” according to Morningstar analyst Patricia Oey.
“Investors want to get closer to the emerging consumer, I think emerging small caps give them that option and make them less vulnerable to slowdowns in the global GDP,” Siracusano added.
For more information on the developing economies, visit our emerging markets category.
Max Chen contributed to this article.