The cheap raw materials and commodities prices will help fuel emerging market growth at a faster pace than developed economies. For example, India is well-positioned to benefit from cheap oil prices as the country is a prominent energy importer. [Falling Commodity Prices a Boon for Some EM ETFs]
Meanwhile, countries like Taiwan can benefit from the U.S. recovery as the island country is the 12th largest goods trading partner with the U.S. as of 2013 data.
Moreover, the added global liquidity, with the European Central Bank adopting a €1 trillion, or $1.3 trillion, quantitative easing program, could push investors toward emerging markets to chase after higher returns. [ECB Stimulus to Fuel Emerging Market ETFs]
Investors who are concerned about the continued strength in the U.S. dollar and its effect on emerging market exposure can also consider the recently launched iShares Currency Hedged MSCI Emerging Markets ETF (NYSEArca: HEEM) and the Deutsche X-trackers MSCI Emerging Markets Hedged Equity Fund (NYSEArca: DBEM), which is three years old, to track developing markets while hedging against forex risks.
For more information on the developing economies, visit our emerging markets category.
Max Chen contributed to this article. Tom Lydon’s clients own shares of EEM and SPY.