Investors that have a once bitten twice shy view of emerging markets exchange traded funds still have reasons to consider developing economies.

Recent strength in the emerging markets complex confirms as much. Over the past 90 days, the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO) and the iShares MSCI Emerging Markets ETF (NYSEArca: EEM), the two largest emerging markets ETFs by assets, are each up more than 9% while the S&P 500 is higher by 3.9% and the iShares MSCI EAFE ETF (NYSEArca: EFA) is up 2.3%. [Cash Returns to Emerging Markets ETFs]

“According to the International Monetary Fund’s April 2014 forecasts, the non-developed market growth slowed in 2013. However we think investors should still be pleased with the expected above-average 7.5% growth for China, 6.5% for the Philippines, 6.4% for India, and 5.2% for Malaysia. Even the 3.7% for South Korea and 3.1% for Poland and Taiwan look favorable relative to the 2.8% for the United States and 1.2% for the advanced Euro area,” said S&P Capital IQ in a new research note.

Compelling valuations have played a pivotal role in luring investors back to EEM, VWO and other emerging markets ETFs. EEM has pulled in $4.77 billion in new assets this quarter, making it the second-best ETF of any type in terms of second-quarter inflows. VWO has added $805 million in the current quarter.

Those inflows are even more impressive when considering some major pension funds significantly reduced their exposure to EEM and VWO during the first quarter. S&P Capital IQ rates VWO overweight and EEM marketweight. [Another Pension Fund Slashes EM ETF Exposure]

“Further from a valuation perspective, according to Bloomberg data, the Emerging Markets Index was valued at a P/E of 11 times 2014 consensus estimates, a 33% discount to the EAFE Index’s 16. Looking back on a monthly basis since 1995, the Emerging Markets Index historically traded at a 32% discount to the more developed international market,” according to the research firm.

Skittish investors that have opted for a low volatility approach to emerging markets ETFs have also been rewarded. For example, the iShares MSCI Emerging Markets Minimum Volatility ETF (NYSEArca: EEMV) and the PowerShares S&P Emerging Markets Low Volatility Portfolio (NYSEArca: EELV) are each about 8% over the past three months.

EEMV, rated marketweight by S&P Capital IQ, is conservatively postured at the country level. China is the ETF’s largest country allocation at 19%, but Taiwan and South Korea, two of the lowest beta emerging markets, combine for over 28% of the ETF’s weight. [Time for a Taiwan ETF]