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"With much of the eurozone mired in a recession and the recovery in the United States progressing at an almost glacial pace, it's not surprising that investors are increasingly turning to emerging markets to augment portfolio returns. It's easy to understand the appeal--emerging markets tend to have young and growing populations, and they now find themselves with an increasing amount of disposable income. By 2020, the number of middle-class consumers in emerging markets may be larger than middle-class consumers in the U.S. and Europe combined. However, investing directly in the stocks of emerging-market consumer companies may not be the most prudent strategy to capitalize on these growth opportunities, as infrastructure investments needed to remain competitive with multinational behemoths may prevent these firms from realizing positive economic returns for an extended period. Instead, Morningstar believes that investing in consumer companies with established economic moats--structural competitive advantages--is the most effective way to participate in the tremendous growth potential of emerging-market consumers, as these companies do not face the same infrastructure burdens as their emerging-market brethren, have easier access to capital, and are not reliant on a single emerging-market economy to generate excess economic returns. These companies are better positioned to compete for share in some of the highest-growth markets in the world."

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