Global emerging market funds in Europe have about $521 billion in assets under management and are expected to double by 2014, according to a Cerulli report released in November. AUM reached a low of $226 billion in 2008, according to exchange rates on Dec. 3. Assets are also above the pre-crisis level of $485 billion in 2007. These results indicate the funds are not a fad and are "part of a long-term shift in investor preference."

According to a release citing the report, "at current growth rates, AUM in emerging market funds could reach close to [$1,070 billion] over the next few years. Emerging markets now account for a greater share of global GDP, which is not yet reflected in capital markets or in investor portfolios."

Emerging market bonds have been popular among investors this year, according to the release, for their income and currency exposure, and low fees have made passive funds popular. For the first seven months of 2010, emerging market debt has attracted 69% of fund flows.

Investors have preferred local currency bonds, Cerulli reports, for their "superior yield and diversification properties." Cerulli expects interest to continue to grow as investors diversify away from developed market currencies.

While single-strategy funds have decreased in popularity this year, Yoon Ng, a senior analyst at Cerulli Associates, sees potential for investors to place a higher priority on them in the future.

"It is possible that investors will prioritize single strategy funds going forward. This thesis is not supported by fund flows, which have been skewed by institutional preference for global strategies, but there may yet be demand for funds focused on Brazil, Russia, India and China, or other specialty areas," Ng said in a release.

Cerulli notes that not all investors have made big changes in their portfolios, but says emerging markets are "more core than satellite," and suggests frontier markets will be the next big investment. Frontier funds manage nearly $8.7 billion in assets.

"Sophisticated institutional and private client investors have been making an allocation to frontier markets, with Africa and the Middle East attracting the most interest," according to the release.