South Korean stocks weren’t a big deal in your emerging-markets fund. Artificial intelligence changed that.

The emergence of artificial intelligence as a significant driver of returns in emerging markets, particularly in South Korea, has caught the attention of investors. It appears that some emerging-markets funds, which may not have initially been positioned as AI plays, have seen their returns significantly boosted by the increasing weight of South Korean stocks, specifically those of companies involved in AI, in their portfolios.

This development highlights the evolving nature of emerging markets and the importance of understanding the underlying drivers of returns in these funds. The fact that South Korean stocks, which may not have been a major focus for these funds, have become a key contributor to performance underscores the rapid growth and influence of the AI sector. It also raises questions about the classification and positioning of these funds, and whether they are, in effect, becoming de facto AI or technology plays.

Going forward, investors should watch how these funds continue to evolve and adapt to the changing landscape. Key questions to consider include: How will fund managers respond to the growing influence of AI in their portfolios? Will they choose to actively manage this exposure or maintain a more neutral stance? Additionally, investors should monitor the performance of other emerging markets and sectors to see if AI is having a similar impact elsewhere, and assess the implications for their overall investment strategy.

Originally reported by marketwatch.com. FundNews adds analysis for finance & markets readers.