Cash is flooding into the few dozen ETFs that track indexes in developing countries nonetheless, including the Vanguard Emerging Markets Stock Fund and the iShares MSCI Emerging Markets ETF. Since January, they drew in a net $20 billion, five times more than active managers and more than double the inflow last year, Morningstar figures show.

On returns, though, ETFs fell short, producing an average of 3.6 percent return annually in the past five years in those markets versus a 4.1 percent gain from active managers, after stripping out management fees.

“If you find a good manager, the chances are there you can actually beat the benchmark,” said Daryl Liew, who helps private-banking clients manage their wealth as the head of portfolio management at Reyl & Cie SA’s Singapore unit. He advises customers to use index funds in advanced countries, but stick with active managers in emerging nations. “The challenge is finding a good manager,” he said.

And it can be a challenge. While Marshall-Lee is outperforming, more than a third of the 358 others tracked by Morningstar trailed ETFs. In the 10 years through 2016, four out of every 10 emerging-market equity funds flopped, according to S&P Dow Jones Indices’ SPIVA Scorecord report for 2016 comparing active and passive investments.

ETF Rush

Advocates of passive investing maintain that developing countries are no exception to the rule that, over the long run, relying on a manager’s intuition won’t beat the benchmark.

Out of every $3 invested in mutual funds focused on emerging markets, $1 is now held in ETFs as passive strategies gain ground. The shift makes sense given that for all the good active managers out there, there are plenty of “dumb” managers who will lose clients money, according to Jack Bogle, the founder of Vanguard Group and creator of the first index fund in 1976.

“That is simply the math,” said Bogle in an interview. “If I sell my bad stock to another emerging-markets manager, there is just no way around the basic principle,” he said.

There are, nonetheless, reasons unique to the developing world to be wary of following the pack into ETFs. For one, they aren’t all that cheap. The average expense ratio for an emerging-market ETF is 50 basis points, or $500 for every $100,000 invested per year, double the price of passive funds geared to U.S. and European markets, according to Morningstar.

And managers have also cut fees to an average of 1.44 percentage points in 2016 from 1.8 percentage points in 2009, the data show. Marshall-Lee’s fund charges 0.95 percent.