The volatility of emerging markets could prove too much of a risk to investors, an analyst says.
Chetan Modi, Morningstar's investment fund analyst, suggested that short-term data showed that emeging markets can offer diversification.
He advised investors to maintain a "moderate level" of exposure in these markets, which he described as a "risky asset class".
"While the returns are enticing for investors, the volatility is likely to be far too much for the conservative investor to stomach," he said.
The company also suggested that the effects of the credit crunch would be felt for "some time to come".
Recently Morningstar also warned against too much reliance on ethical funds investment.
Investment fund analyst Muna Abu-Habsa said that a lot of ethical fnds were lower down the market-cap ladder than rival investments and this introduced a higher business risk and share price volatility.
In addition, restrictions on ethical finds could inhibit performance, he added.
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