"With their eye-popping 80% returns, emerging markets are the places every investor wishes he'd had greater exposure to last year. It's easier than ever to get just such exposure these days courtesy of the exchange-traded fund industry, which since the beginning of last year has launched ten emerging markets funds, plus another eight that invest in single emerging countries.
For many of the small investors who've bought into these ETFs recently, the early returns have been disappointing. Emerging market stocks are down 5% so far this year.
If this scenario sounds familiar, it is with good reason. In 2000 the fund industry flooded the market with 71 mutual funds specializing in tech stocks, just in time to carry investors over a cliff. The tech-heavy Nasdaq is down 50% in the past decade.
In all of this, fund sponsors are capitalizing on a quirk of human nature--namely, that we collectively suffer from the phenomenon known as "recency," or the tendency to assume the near future will look a lot like the recent past."Read the complete Forbes.com article here.
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