One of the benefits of investing in large, developed markets is that you can generally buy and sell most stocks and bonds quickly, at a fair market price. In other words, the securities tend to be very liquid. This isn't always the case in smaller markets, which is one reason they're not well suited for individual investors.
Emerging markets tend to have fewer active participants and a more limited money supply, which means you may not be able to sell an investment as quickly as you'd like if there are no buyers at the price you want. Or you may have to settle for an unattractive price if you want to get out of the market quickly. It can also take longer for transactions to be processed, so you may have to wait for the proceeds of your sale to make their way into your account.
Jeffrey Rosensweig, Goizueta Business School, Emory University
By one estimate, only about 30% of the potential investments in emerging markets are available to overseas investors.
Jeffrey Rosensweig, Goizueta Business School, Emory University 