But past performance is not always a guide, and for those brave enough, potential rewards are high. "We will look back and see that 1998/99 was the bottom of the market," says Philip Ehrmann, the head of emerging markets at fund management group Gartmore. However, there is no doubt that putting your capital into a developing market is still risky.
Emerging markets are economies of developing countries such as Brazil or Thailand or ones that have recently eased restrictions on foreign investment, such as the Czech Republic and Poland.
The main argument for investing in these new markets is that they have far more scope for growth than established economies. They can capitalise on low local wage costs, for example.
Productivity may also be higher because of greater motivation, suggests Tim Cockerill of independent financial advisers Whitechurch Securities, in Bristol. "It sounds like a cliche, but in emerging markets the work ethic is very strong," he says.
Investing a small proportion of your portfolio can also help you spread your risk by providing an extra layer of diversification. "There are times when those markets will do very well," says Mr Cockerill. This could be when the UK market is taking a dive.
There is a whole range of collective investments - unit trusts, investment trusts and open-ended investment companies - that focuses on emerging markets. Many are global while others stick to a particular region. But since emerging markets are high risk, it's best to stay as diversified as possible.
"We haven't used any single country trusts... those are for investment professionals only," says Peter Smith, of the independent financial advisers Hill Martin.
Apart from its Emerging Markets unit trust, Aberdeen Prolific runs its Frontier Markets unit trust, which only invests in Europe, the Middle East and Africa (Emea).
Radhika Ajmera, the head of emerging markets at Aberdeen Prolific says that countries in this broad region have the best fundamental prospects for growth of all emerging markets.
So far this year, the MSCI emerging markets free index - a benchmark for emerging markets as a whole - has risen 7.3 per cent. But that hides huge differences between the regions. The MSCI Latin America index is up 2.4 percent, the Asia index up 5.1 per cent but the Emea index is up 13.9 per cent, says Ms Ajmera.
Within the Emea region, Greece has been one of the countries powering that growth. In March last year the drachma joined the European exchange rate mechanism, and since then the country's stockmarket has surged 100 per cent, she says.
Tim Cockerill recommends funds that stretch across all emerging markets. Any one country could suffer from all manner of nasties such as corruption and currency speculation. "There are too many surprises in the woodwork, so I find a broad-based fund run by a quality manager is best," he says, suggesting Mercury and Perpetual.
Stuart Louden, of brokers Hargreaves Lansdown, says investment trusts, rather than unit trusts, are now the best type of fund for anyone investing in emerging markets.
General emerging markets investment trusts are trading at a 20 per cent discount to their net asset value because they have had such a bad run recently. So if the assets do perform, that discount should narrow, enhancing returns considerably. He recommends the Templeton Emerging Markets investment trust, the biggest stock in the sector.
If you want to go for it, how much should you put in? Five to 10 per cent of your investment portfolio, says Tim Cockerill. But you should consider this a very long-term investment, intending to stay put for at least 10 years, he says.
Although a few emerging markets investments can be held tax-free within a PEP, the choice is limited. But there are no such restrictions on emerging markets investments for Individual Savings Accounts (ISAs) when they supersede PEPs next month.
Past performance records of emerging markets funds make depressing reading. If you had invested pounds 1,000 in the Gartmore Emerging Markets unit trust five years ago, your capital would be worth just pounds 442.67 now, according to Moneyfacts, the financial information provider. And in the Govett Asia Smaller Companies investment trust, that pounds 1,000 would have dwindled to pounds 261.28.
But this year emerging markets funds have powered ahead, and there are many reasons to be optimistic. Global growth rates are looking better than expected, lower European interest rates should promote investment and intra-regional trade is picking up in Asia, says Philip Ehrmann. "Emerging markets have had their worst year, so they are coming off a low base... the valuations look pretty attractive," says Ms Ajmera.
But Peter Smith is not convinced. "Just because something is low doesn't mean it can't go any lower," he warns. "The problem is, no one is making any money out of this at all... it is highly speculative, and I just feel - who needs it?"
Whitechurch Securities: 0117 9442266; Hill Martin: 0171 233 2777; Hargreaves Lansdown: 0117 9009000
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