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Could someone fill me on on the 'emerging market' funds? How have these done historically and what do they usually include?

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"International" usually means developed international countries. For US investors, it means Canada, most of Europe, Japan, Hong Kong, Singaopre, Australia and New Zealand.

Emerging markets are less developed but faster growing coutries. DFA currently uses these countries: Brazil, Chile, Czech Rep, Hungary, India, Indonesia, Israel, Korea, Malaysia, Mexico, Philippines, Poland, South Africa, Taiwan, Thailand, and Turkey. Historically, they have done very well, and they have done very well in recent years. However, they are risky, and can have big down years.

-Tom

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EM should definitely be in an allocation in some form.

they aren't overly uncorrelated with developed world equities at this point and likely won't become uncorrelated anytime soon (correlated business cycles globally+ many EMs are commodity exporters and thus depend on int'l growth for high returns. those that don't export commodities export other stuff and many equities in those companies thus depend on international demand).

BUT, they do provide high returns w/ slightly higher risk as a major break in the historic trends of these countries has recently occurred. typically, when EM growth was huge, they'd borrow and consume. now, they are saving and lending. that is huge and it seems they are much more well posed to turn into the late cycle than historicaly they have been.

either way, they should be in equity allocation as they are not 100% correlated with developed world equities and shouldn't be expected to be. + they provide high returns and their increased risk doesn't offset the diversification gain from an overall portfolio allocation perspective.

Barron