Ever heard the term: ‘emerging markets’? Maybe if you have studied geography, economics or are working in the finance industry, but for many people, the term is relatively unknown.

The phrase was first coined back in 1981 by the World Bank. Although the actual market economies in question may have changed, the term and its usage remains the same. So what does it mean?

The term refers to low to middle income countries whose economies are being reformed, developed and opened up to the world at large. These countries tend to comprise around 80% of the world population, yet just 20% of its economies, but that proportion is on the cusp of changing.

Countries that are ‘emerging’ onto the global scene are rapidly developing economies of various sizes and levels of development. Countries that are viewed as emerging markets include Brazil, India, Russia and China, however, there are many more to choose from too. These economies still have their fair share of problems; human rights issues and politics may come below economic development for example and rapid growth may come at the expense of environmental degradation, social injustices and polarisation between rich and poor. Some countries are fairing much better than others.

So what does this mean to you? Why should you care? If you are looking for a new place to invest or to make some extra cash for your company, without putting your money in a rather lacklustre UK investment fund, putting your money where the emerging markets are is a good way to increase the chance of a large return.

Because these countries are developing so rapidly, there is great potential to reap in massive returns and hefty profits. Emerging markets have been recovering faster than highly developed countries like the UK, plus their young and abundant workforce is also going to help further increase their development potential.

So, what’s the catch? Well, these economies, as mentioned above, are far from perfect. They still have political instability in many cases, as well as problems with corruption and banking reform. Additionally, because you are investing in an economy that is unstable with a high level of risk, along with winning big, you could lose on a mega scale too.

You need to be aware of everything before making a commitment to an emerging markets fund. For more information, guidance and the emerging markets funds themselves, check out Legal and General online.