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If you’re looking for international investment opportunities for your Individual Retirement Account or a 401(k), then your choices are typically between developed markets and emerging markets. Savvy investors understand the difference between both of these markets.

However, what if you’re a novice investor who doesn’t understand emerging markets or developed markets? Maybe you’ve noticed there are ETFs labeled as ‘Emerging Markets’ or as ‘Developed Markets’ and you’ve wondered what they might refer to.

Furthermore, you might also be curious to see what the outlook is for each asset class.

International Investment Opportunities: The Difference

The difference between Developed Markets and Emerging Markets is essentially an economic one.

Developed nations have more advanced economies. These include the U.S., the U.K., Germany, Japan and many other economic powerhouses across the world. These nations have more developed infrastructure, their citizens earn higher annual per capita income and have higher standards of living.

Emerging nations are still trying to develop their economics. These nations include China, Russia, Brazil, India, and several other nations throughout Europe, Africa, Asia and South America. Unlike their Developed Market counterparts, these countries lack the infrastructure, have lower standards of living and their economies are not as stable.

A well-diversified portfolio will try to incorporate both Developed Markets and Emerging Markets. However, which asset class should you allocate more funds to?

Developed Markets Outlook

Throughout the past few years, Developed Markets have been one of the most steady investment opportunities around. For example, if you were to examine the Vanguard Developed Markets Index Fund, you’d recognize that this asset class has rebounded since the global financial crisis and has been producing consistent returns.

With potential volatility in the U.S. markets, it makes sense to invest in Europe and other developed markets. Many experts predict that the outlook for Developed Markets is very positive, and it could rise throughout 2018.

Emerging Markets Outlook

After years of lagging behind, Emerging Markets had a breakout year in 2017. Assisted by factors like a weaker U.S. dollar, the benchmark EEM increased by 25 percent in 2017. That’s a successful Emerging Markets 2017 performance!

And this might only be the beginning for Emerging Markets. One expert predicted that the rally will continue well into 2018 or beyond.

With Emerging Markets poised to have a great future, now is this time to sign up with a Robo Advisor so that you can allocate your funds proportionally into this asset class. Emerging Markets might be one of the hottest investment opportunities out there.