Emerging markets take lead in 2014

Cristian Baitg | E+ | Getty Images

While U.S. indexes suffer from the dog days of summer, emerging markets look to be on a tear.

Markets in Turkey, Saudi Arabia and Egypt are up more than 6 percent in July.

Year to date, equity indexes in Argentina and Ukraine are significantly outperforming their peers in developed markets, with returns averaging over 45 percent.

Among the BRICS, India's Sensex leads the group with a 24 percent gain, followed by indexes in Brazil and South Africa both gaining more than 12 percent so far this year.

As global markets hit multiyear highs, will investors' appetite for risk continue to drive these markets?

Read MoreThe rally in emerging markets: Should you get in?

Best Performing Markets

MTD % Chg.
YTD % Chg.
Argentina 8,396.38 6.45% 55.75%
Ukraine 1,280.40 4.38% 40.70%
Egypt 8,744.39 7.06% 28.92%
India 26,271.85 3.38% 24.10%
Turkey 83,773.96 6.73% 23.56%
Saudi Arabia 10,214.73 7.27% 19.67%
Indonesia 5,098.64 4.51% 19.29%
Philippines 6,889.89 1.43% 16.98%
Canada 15,386.49 1.59% 12.96%
South Africa 3,091.79 2.09% 12.50%
Brazil 57,518.99 8.18% 11.67%
Italy 21,152.88 -0.61% 11.52%
Taiwan 9,527.54 3.04% 10.64%
New Zealand 5,174.71 1.04% 9.24%
Spain 10,826.80 -0.89% 9.18%
S&P 500 1,988.22 1.43% 7.57%

Month to date, the iShares MSCI Emerging Markets ETF (EEM), a fund that tracks the investment results of an index composed of large- and midcapitalization emerging market equities of 22 countries, is up over 3.75 percent.

This compares with its U.S. counterpart, the SPDR S&P 500 (SPY), which is up 1.5 percent in the same period.

Further, the ratio of EEM versus SPY—a technical measure used to calculate relative strength of the two groups—has fallen more than 8 percent since the high in March, implying that emerging market stocks have significantly outperformed U.S. stocks during the period.

In fact, the ratio is now at a short-term inflection point, hovering roughly 1 percent above its 50-day moving average.

A break below the average might indicate investors will continue to find emerging market returns more lucrative in the near term relative to U.S. markets.

The following ETFs provide a sample of securities traded in the U.S. with exposure to emerging markets.

Emerging Market ETFs

EEM IShares MSCI Emerging Markets Index Fund 44.94
EDC Direxion Daily Emerging Markets Bull 3X 34.55
GMM SPDR S&P Emerging Markets 70.11
PXH PowerShares FTSE RAFI Emerging Markets Portfolio 22.53
VWO Vanguard Emerging Markets 45.12
ILF IShares S&P Latin America 40 Index Fund 40.95
GML SPDR S&P Emerging Latin America 67.67

—BY CNBC's Pradip Sigdyal