Emerging market index funds - worth the risk?

Emerging markets are exciting and can definitely give you higher returns than developed markets. but instead of buying into em instead of us equities for example, i'll try to balance between the 2. the idea here is diversification. so i'd suggest about 20-25% of your portfolio in em if you're feeling aggressive.

but i'd also not recommend going into the broad index. there are tons of duds in such a broad em index. i'll choose to pay for a fund manager to handle active management for any em investment, be it bonds or equities.

the s&p 500 or any other developed market index is efficient and curated well, but an em index is definitely less efficient and can hurt you by going too broad.

Personally, i do agree that investing in emerging markets is quite risky. The stocks themselves are more volatile, and you are exposed to currency risk that can fluctuate quite a bit also, espeically with the trade war and trump's tweets. However, i have also came across articles that argue that you invest in ems too. Some of these reasons are

1. Gdp growth: higher expected gdp growth in ems compared to more developed countries driven by an increased in work force as well as their work productivity

2. Evolution of emerging markets: ems are evolving and comprising more of the global economy as compared to before. they are also moving away from labour-intensive, primary and secondary industries into more skills based, tertiary industries. the middle class market have also grown larger over time.

3.Big difference in valuation between us markets and emerging markets with much lower pe ratios for emerging ones

4. Overvalued us dollar: there is some talk regarding the us dollar being overvalued. if the dollar does weaken, the us market will tend to underperform relative to other markets.