Emerging-markets funds are on fire. Over the past 12 months through April 18, the MSCI Emerging Markets index has returned 27.1%. That's 7.6 percentage points more than the MSCI EAFE index of developed countries outside the U.S. and 9.6 percentage points better than Standard & Poor's 500-stock index.

The rally looks likely to continue. Corporate earnings are growing at a rapid clip in many emerging markets, and the stocks are cheap. EM shares are trading at 11.9 times analysts' estimates for the coming 12 months. That compares to a forward price-earnings ratio of 16.6 for the S&P 500 and 13.8 for the rest of the developed world. The World Bank projects emerging economies will grow 4.5% this year compared to 2.2% for developed economies.

Emerging markets do have their issues. For instance, EMs have higher rates of corruption than developed economies and many have not embraced capitalism. Russia is the poster child for these afflictions. Many emerging markets are dominated by commodity-producing companies, which tend to go through long periods of feast and famine. Others, such as China, have a high percentage of state ownership of publicly traded companies.

Historically, emerging markets have either led the pack or trailed it for multiyear periods. The most recent dry spell was from 2011 through 2015, when EMs lost an annualized 4.8% thanks to meager earnings growth, particularly in commodities. For the five previous years, emerging markets returned an annualized 12.8%, topping the U.S. and the MSCI EAFE index by more than 10 percentage points.

My advice: Own emerging markets, especially when they're relatively cheap, as they are now. But don't get carried away. Dedicating 10% or 15% of your portfolio to a good emerging-markets fund makes good sense to me. Here are my five favorites:

Vanguard Emerging Markets Stock Index

Market value: $93.8 billion

Dividend yield: 0%

Expenses: 0.32%

Vanguard Emerging Markets Stock Index (VEIEX, $29.58) charges low fees in a sector where high fees are still the norm. That's a big plus. The Admiral shares (VEMAX, with a $10,000 minimum) charge 0.14% annually, as does the exchange-traded-fund version (VWO). The investor shares carry a minimum of $3,000 and charge 0.32%, which while higher still is well below the Morningstar category average of 1.40%.

Like many emerging-market funds, VEIEX is heavily invested in China, home to a strange brew of capitalism, corruption and oligarchy. The government often calls the shots on what companies can and can't do. The fund has a 34.2% allocation to the country, but also has large weightings in Taiwan (14.5%), India (10.6%), Brazil (8.3%) and South Africa (7.4%).

The Vanguard fund has 48% of assets in cyclical stocks, such as basic materials, financials and consumer cyclicals - which can work both in favor and against it. No surprise, then, that this is by far the most volatile of the funds we'll cover today.

Finally, common sense argues that a skilled manager should have the best odds of beating an index in less efficient markets, and emerging markets are as an inefficient a sector as any you can find. Still, VEIEX has managed to beat more than 60% of similar funds across every meaningful long-term time frame, and it has done so with far lower fees than most competitors.

American Funds New World F1

Market value: $37.3 billion

Dividend yield: 0.81%

Expenses: 1.04%

American Funds New World F1 (NWFFX, $68.00) is my top pick for emerging markets. It's also, by design, the least volatile of these funds. Low volatility means investors are likely to hang in long enough to earn the handsome profits that volatile emerging markets offer to patient investors. After the Vanguard index fund, it's also the cheapest of these funds.

New World stashes about half its assets in stocks of developing countries that do lots of business in emerging markets. The managers have enormous leeway in deciding what stocks fit that bill. For instance, Alphabet (GOOGL), parent company of Google, and South Korea's Samsung (SSNLF) are large holdings. Meanwhile, the fund currently holds just 15.7% of assets in China. The fund is overweight consumer stocks and health care, and it's underweight cyclicals, such as commodities.

Expect this fund to lag when emerging markets are strong, but to lead the pack in lousy markets. In 2015, for instance, when the MSCI Emerging Markets index plunged a ghastly 14.9%, New World dipped just 6.0%. Conversely, in 2016, when the index climbed 11.2%, New World gained only 3.9%.

After Vanguard, American Funds are my favorite large fund company. The funds boast low fees, a strong corporate culture (most managers and analysts stay their entire careers), and tend to hold up particularly well in bear markets. The F1 share class can be bought through Schwab, Fidelity and several other online brokerages.

T. Rowe Price Emerging Markets Stock

Market value: $11.8 billion

Dividend yield: 0%

Expenses: 1.23%

Talk about consistent outperformance. Since Gonzalo Pangaro took over as lead manager in late 2008, T. Rowe Price Emerging Markets Stock (PRMSX, $45.85) has finished in the top half among emerging-markets stock funds in every year save one. Over the past five years, the fund has returned an annualized 7.8% - an average of 2.0 percentage points better than the MSCI Emerging Markets index.

Backed by a large and seasoned team of international stock analysts, Pangaro manages the same way most T. Rowe managers do: He emphasizes stocks with growing earnings, but includes more conservative offerings, as well as stocks trading at high multiples of earnings and revenues.

The fund currently invests 35% of assets in technology stocks and another 25% in consumer stocks. It underweights cyclical stocks. The fund has a 25% weight in Chinese stocks compared to the MSCI benchmark's 30% weight. Pangaro's only notable country overweight is Brazil, where he has 10% of assets in the politically troubled country compared to 30% for the MSCI's emerging-markets index.

Pangaro has big stakes in Chinese Internet giants Tencent (TCEHY), Alibaba (BABA) and Baidu (BIDU), but leavens the riskier plays in the fund with blue chips like South Korea's Samsung and insurance giant AIA Group (AAGIY).

Pangaro has been with T. Rowe since 1998, and made his reputation with the firm by running its Latin America fund. Born in Argentina, Pangaro has been investing for a living since 1991. In addition to English, he speaks Spanish and Portuguese.

Fidelity Total Emerging Markets

Market value: $896 million

Dividend yield: 1.55%

Expenses: 1.26%

Here's something you rarely find in emerging markets: an old-fashioned balanced fund. It's worth serious consideration. Jim Lowell, editor of Fidelity Investor newsletter, who brought it to my attention, calls this unusual entry "a round peg in a square hole."

As its name implies, Fidelity Total Emerging Markets (FTEMX, $13.61) typically invests 60% assets in stocks and the rest in bonds. But depending upon the opportunities lead manager John Carlson and the fund's other managers see, the fund will go heavier into either stocks or bonds. Currently, the managers like stocks, so the fund holds just 23% in bonds.

The managers make some very small bets on countries where they see especially good values. For instance, 7% of assets are in Russia compared to 4% for the index. But almost all the action in stocks is on picking good stocks.

Carlson and company make much bigger bets in bonds, emphasizing attractive countries, sectors and individual securities. Lowell calls Carlson "one of the most seasoned emerging-markets debt investors."

Because of its big bond stake, this fund, like New World, offers a relatively smooth ride in this notoriously bumpy sector. But performance has hardly been shabby. Launched in late 2011, the fund has beaten the average EM stock fund in every year but 2014, when the MSCI index was up half a percentage point, and in 2017, when the index soared 37.3%. The Fidelity fund returned 29.6% that year, which hardly qualifies as bad. Over the past five years, the fund has returned an annualized 6.8% - an average of one percentage point per year better than the index.

Matthews Emerging Asia Investor

Market value: $523 million

Dividend yield: 0%

Expenses: 1.47%

As its name implies, Matthews Emerging Asia Investor (MEASX, $15.63) hunts for small- and mid-size stocks in the less developed emerging markets of Asia, almost all in so-called frontier markets. The average stock has a market cap of just $1 billion. More than one-fifth of assets are invested in Vietnam, 14% apiece are in Pakistan and Indonesia, and 11% apiece are in India and Bangladesh. Of these, only India isn't considered a frontier market.

Matthews does Asia -- and only Asia. In my opinion, it does a better job investing in Asia than any other firm. This boutique has done a great job of sticking to its roots. The only negative is price: The company's funds aren't cheap.

Emerging Asia, launched in mid-2013, has returned an annualized 10.1% since inception, compared to 8.4% for the MSCI Emerging Asia index. The fund, moreover, has exhibited relatively low volatility. But don't be fooled: This a frontier fund -- one with lots of risk, and one that should be owned only in small amounts.

Co-managers Robert Harvey and Taizo Ishida have run the fund since inception. They don't like to trade, which is a good thing, because trading in frontier markets can be very expensive. Buying and selling even small stakes in frontier stocks tends to push the price in the wrong direction. Turnover has averaged less than 10% annually.

Steven Goldberg, a Contributing Columnist for Kiplinger is an investment adviser in the Washington, D.C., area.