Goldman: Cut your emerging markets exposure by a third

Cristian Baitg | E+ | Getty Images

Goldman Sachs has a clear warning for investors: Emerging markets will continue to disappoint.

In a December report, the bank's investment management division predicted "the strong possibility of significant underperformance and heightened volatility over the next five to 10 years."

The client note, titled "Emerging Markets: As the Tide Goes Out," recommended that investors with a "moderate" tolerance for risk reduce their exposure by one-third, from 9 percent to 6 percent of overall portfolios.