For example, VWO is trading at a 13.49 price-to-earnings and a 1.65 price-to-book, and EEM shows a 12.64 P/E and a 1.5 P/B. In contrast, the S&P 500 has a 18.57 P/E and a 2.48 P/B.

Due to the cheaper relative valuations, many money managers have also slowly added more emerging market exposure. According to data from Copley Fund Research, which tracks investments of 120 dedicated global EM equity funds with $290 billion in assets, the average weighting in developed market shares among the funds it covers rose from 6% at the beginning of 2011 to a peak of 9.3% in February 2014, but it has since dipped to less than 7% in June. Over the same periods, emerging market company allocations fell from 88% to 85% and are now back up to 88%.

The shifting attitudes have also been mirrored in the ETF market as emerging market funds attracted greater interest. Over the past year, VWO saw $2.7 billion in net inflows, according to ETF.com. While EEM lost $11.1 billion in outflows, the iShares Core MSCI Emerging Markets ETF (NYSEArca: IEMG) experienced $3.2 billion in inflows, which suggests that investors are favoring the cheaper “core” iShares emerging market product over the older option – IEMG has a 0.18% expense ratio, compared to EEM’s 0.69% expense ratio.

For more information on developing economies, visit our emerging markets category.

Max Chen contributed to this article.

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