What's the one thing that makes investing in China just like investing in Qatar and in Brazil?
OK, that's a trick question. The three economies don't have much in common, except that they're all members of a group called the emerging world. But for years, many investors made little distinction between them and other emerging markets. And it didn't matter much that they did. Stock and bond markets across emerging markets often moved together, swinging up and down in concert.
But emerging markets are increasingly moving to their own rhythms. Chinese stocks have jumped almost 14 percent over the last year, for example, while Brazilian stocks have sunk by nearly the same amount in dollar terms. The diverging fortunes mean one person's emerging-market mutual fund can have much different performance than another's, depending on how they're constructed.
"Everyone thinks of the emerging markets as this monolith," says Martin Schulz, manager of the PNC International Equity fund. "I often hear, 'What do you think about emerging markets?' And I say, 'It depends. Which emerging markets are you talking about?'"
To see how performance has become more varied, look at the 23 countries that make up the MSCI Emerging Markets index. It's a widely used benchmark for emerging-market stock funds, and its components stretch from Chile to the Czech Republic to China.
In 2011 the general trend was down, and stocks in all but two of the index's markets fell. That same year, every mutual fund tracked by Morningstar that invested in a broad range of emerging markets had losses.
In 2012 the trend went in the opposite direction. All but four of the index's component markets rose, and every emerging-market stock mutual fund but one made gains.
The performance chart has since become much more scattered. Over the past year, 10 of the index's stock markets are up, and 13 are down. Among mutual funds, the top performer has returned 18 percent, while the weakest has lost 16 percent.
What's behind the split? One big factor is the sharp drop in prices for commodities. Crude oil is trading around $50 per barrel, down from more than $100 during the summer. Copper fell last month to its lowest price since the summer of 2009.
That is hurting countries that are big exporters of commodities. Stocks in Russia, the world's second-largest oil exporter, have sunk 32.8 percent over the past year. In Chile, the world's biggest producer of copper, stocks are down 9.4 percent.
Cheaper commodities, though, mean an economic boost for countries that are net importers and helped to boost stock prices in China and elsewhere.
Politics have also been a big driver. Russia is struggling not only with falling oil, for example, but also with worries about tensions in Ukraine. India, meanwhile, is seeing the benefits of political change.
Investors are hopeful that Prime Minister Narendra Modi, who was elected last year, can push through economic reforms to invigorate the world's second-most populous country. Indian stocks have surged 37.6 percent over the last year.
The divergence in performance has also led to a split in where dollars are heading. Indian stock mutual funds and exchange-traded funds have attracted $4.2 billion over the last year, for example. That's nearly half of the $9 billion that the category controls collectively.
Latin American stock funds, meanwhile, have had net withdrawals of $408 million. Funds that invest in a diversified mix of emerging markets have attracted a net $18.2 billion.
It's not just stocks that have had a divergence in performance for emerging markets. Bonds are getting affected too, which is pushing managers to get choosier in how they invest.
Commodity prices are again a big driver. Russia's foreign-currency credit rating was cut to "junk" status last month by Standard & Poor's, which said further downgrades may be on the way given weakened prospects for economic growth.
Moves in the currency market are also cleaving winners from losers. The dollar's value has rallied to its strongest level in years against other currencies given expectations that the Federal Reserve will raise interest rates later this year.
A stronger dollar means interest payments made by bonds in other currencies become less valuable. Some emerging-market bonds are denominated in their respective currencies, and they've broadly seen losses recently. Emerging-market bonds denominated in dollars, meanwhile, have broadly seen gains.
"We still think it's an interesting market," says Olga Yangol, a senior emerging markets debt product specialist at HSBC. "You just have to approach it differently from what was the norm in the past. It will be much less about the asset class as a whole than about what goes on in each individual group."