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An investor would have to be nuts to go long/short emerging markets unless he or she has really solid quantitative tools to help estimate risk. You could easily build a portfolio that will have enormous risk. You would need tools that generate forward-looking volatility estimates for all of these countries. Yipes. The idea of people trying this without being exceptionally capable quantitatively is really scary. What is the risk of being long Brazil and short India? Etc. See this article for some plausible risk outlooks for emerging markets:
Nov 08 12:14 pm
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All Comments by Geoff Considine »A Long/Short ETF Portfolio For Emerging Markets [View article]
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On top of risk, you would need to capture correlations. There is a lot of basis risk here.