Each day we are forced to consider the many risks we encounter just by living our lives. Wearing a seatbelt and putting away our phones can help protect us as we drive to work. Setting aside some savings may help us mitigate the risk of an emergency that might cost us more than we planned for. And don’t forget all of the fine print we read through as we make a major purchase, just so we are aware of the potential risks associated with this decision.
But we must also recognize that risks can evolve over time. In the case of emerging markets, numerous changes have been made to how governments operate and how businesses are run. The result is a more modern – yet still dynamic – market that can offer plenty of attractive investment opportunities.
Foreign securities are more volatile, harder to price and less liquid than U.S. securities. They are subject to different accounting and regulatory standards, and political and economic risks. These risks are enhanced in emerging markets countries.