The widely followed MSCI Emerging Markets Index entered Thursday with a year-to-date loss, signaling that for the first time in two years, emerging markets stocks are lagging their developed market equivalents.

While data suggest some investors have recently departed the iShares MSCI Emerging Markets ETF (NYSEArca: EEM), some market observers believe there are still reasons to consider developing economies.

Emerging markets equities still trade at a discounts relative to U.S. benchmarks, but the utility of the quality factor in the developing world cannot be understated. Historically, when emerging markets stocks decline, it is lower quality names driving those declines.

“However, recent weakness has restored relative value, particularly for stocks. Based on price-to-book (P/B), the MSCI Emerging Index is trading at a 30% discount to MSCI World Index of developed markets (see accompanying chart). This represents the largest discount since December 2016 and compares favorably with the 10-year average of 14%,” according to BlackRock.

The Best Emerging Markets

According to a recent Bloomberg survey, investors pointed to selective emerging market opportunities, such as Mexico and Brazil, which were among the most favored emerging market investment destinations. For its part, BlackRock is bullish on China, Brazil and India.

Related: Why Revenue-Weighted ETFs Are a Good Fit Now

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