Developed markets are large, both in market value and volume of trading, and they generally benefit from a well-established infrastructure of financial services companies. This makes developed markets more liquid,
because there's an efficient system in place to match buyers and sellers, and because there are enough buyers at any one time to make it easy to liquidate an investment at a fair market price.
Ups and downs in developed markets are also fairly easy to follow, since trading is transparent.
Plus, the financial press and financial Web sites report regularly on what's happening. And because the governments are stable, investment in developed securities markets tends to expose you to no more political risk than investment in U.S. stocks or bonds.
Hundreds of companies in developed markets — including many of the non-U.S. brands you know best — are registered with the Securities and Exchange Commission (SEC) and sell investments, such as American depositary shares (ADSs), American depositary receipts (ADRs), global depositary receipts(GDRs), and Yankee bonds,
directly on U.S. markets. That means the information they provide to investors is in line with U.S. reporting requirements, including financial statements audited using U.S. accounting standards.
Jeffrey Rosensweig, Goizueta Business School, Emory University
Dr. Jeffrey Rosensweig of the Goizueta Business School of Emory University discusses how financial regulation differs among developed nations.
Until fairly recently, financial regulation differed a good deal, even among developed markets. Thus, a country's economic development, and the size and stability of its economy, had more to do with whether a market was classified as emerging or developed than its financial regulations. After recent regulatory crises in Europe and Japan, as well as the U.S., international organizations have increased efforts to achieve greater consistency and harmony in regulatory standards.
Jeffrey Rosensweig, Goizueta Business School, Emory University 