As emerging markets get crushed, reasons to own the space are cropping up

The Turkish lira's devastating sell-off, along with the broader Turkish market, is exacerbating emerging markets' recent decline. Investors might find opportunities amid the rubble, but the key is being selective.

The emerging markets-tracking EEM ETF is showing signs of recovery amid international trade war turmoil, and there are several reasons to own the space. To be sure, the EEM is down on the year, but it's managed to bounce nicely off its June lows.

Finding growth

With European growth already topping out, and U.S. growth likely peaking as well, emerging markets remain a solid source of global growth.

Analysts expect earnings growth in emerging markets to rebound in 2019, despite recent softness from the global trade slowdown. Rising oil prices should benefit emerging markets, too.

Selection matters

Of course, there's good reason to be selective about exposing your portfolio to emerging markets. Trade war tensions are affecting specific country outlooks such as China, Mexico and now Turkey.

The effects are expected to be localized, and so being active rather than passive in emerging markets right now can help minimize some of this pain. A country-specific ETF for a country, like India, would be option.

As the trade cycle slows and the commodities cycle picks up, gaining exposure to big oil countries like the iShares MSCI Saudi Arabia ETF could enhance a portfolio; that ETF is up 16 percent this year.

Investors would be prudent to remember, too, that as geopolitical tensions continue to roil markets, remember the emerging variety tends to respond poorly. So if you'd like to gain emerging markets exposure but want to avoid the tail risks, something more like the iShares Edge MSCI Minimum Volatility Emerging Markets ETF might be more your speed.

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Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's Closing Bell (M-F, 3PM-5PM ET). In addition, he contributes to CNBC and CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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