The recent events of Tunisia and Egypt reminded us all of the political risk involved for investors in emerging markets.

Indeed, regular readers will note that this column only recently reminded investors of political risk issues involved with emerging – now emerged – markets.

I don’t take anything back now about the downsides that political issues bring. However, on reflection the overwhelming positives for these markets over the medium to longer term make them still attractive for the patient investor who can cope with some (likely) short-term volatility.

The recent short-term has seen a fall in the MSCI Emerging Markets Index which lost circa six per cent in the first few weeks of the year.

The underperformance is due to inflationary pressures that are starting to appear amid rising commodity prices – particularly food prices.These pressures are forcing authorities to tighten monetary policy and raise interest rates.

For example, the Chinese Central bank has rounded off New Year celebrations by raising interest rates for the third time since October. The 0.25 per cent rise pushed the rates for one-year deposits and one-year loans to three per cent and six per cent respectively.

However, recent events in the investment world have made most of us too short-term.

What about fundamentals? Have we all forgotten that investments are, or should be, made for the medium to long-term? For anyone with a medium term plus view, an exposure to global emerging markets (GEMS) seems to make sense.

Only a decade ago, the notion that institutional investors should consider allocating a proportion of their capital to GEMS would have been almost unthinkable.

The equity component of a typical UK occupational scheme would largely consist of a substantial tranche of UK equities along with exposure to US, Europe and Japan.

Although the more adventurous would include a small allocation to South East Asia, very few opted for a specific GEM component and, where they did, the allocation would be tiny.