An asset class that was once a mainstay of an investor’s portfolio has fallen out of favour among the investor community more recently.

The performance of the MSCI Emerging Markets index in the past 12 months to October 22 2014, shows it has lagged the MSCI World index, according to data from FE Analytics. The former index posted a loss of 2.23 per cent, against a return of 5.32 per cent generated by the MSCI World index over the same period.

Neil Denman, fund manager, global emerging markets at Polar Capital, suggests investors are more “willing and comfortable” buying into the region when it appears to be having a period of outperformance and acknowledges the poor performance of the asset class over the past four to five years.

He says: “I think it’s fair to say that investors are still pretty sceptical of the asset class. They have concerns regarding what’s happening globally, in particular, what’s happening with monetary and fiscal policy in the US.

“The end of quantitative easing is a big issue and the strength of the dollar is a big issue. People are still not willing to increase allocations to emerging markets, even though there are some opportunities out there.”

It is worth investors noting that the term ‘emerging markets’ covers a rather broad range of countries, each with very different economies and, in some cases, diverging policies.

In a recent note, Stephen Cohen, chief investment strategist, Europe, Middle East and Africa, at iShares, believes the outlook for emerging market Asia valuation and growth looks attractive.

He notes: “In emerging markets, uncertainties ahead include the uncertain growth path of the Chinese economy and US dollar strength.

“Differentiation by country is the name of the game in this stage of emerging markets investing.”

For Mr Cohen, the opportunities lie in India, Taiwan and Korea because of reform expectations, economic growth potential and strong external balances, respectively.

China, perhaps the most well-known of the emerging markets, may be experiencing slowing growth, but Mr Denman claims that its economy should be growing at a slower rate if the country wants to rebalance its economy.

Comparing emerging market countries to their developed market counterparts shows that the asset class remains an exciting investment prospect.

“In a low-growth world and with the debt burden that a number of nations have, particularly in the developed markets of Japan, Europe and the US, emerging markets do offer opportunities,” Mr Denman says.

So for those investors whose portfolios do not currently have a weighting to emerging markets, now may be the time to consider the asset class once again.

Ellie Duncan is deputy features editor at Investment Adviser