Both Turkey and South Africa spooked investors by raising rates much more aggressively than forecast, sending shockwaves through markets.

Emerging markets are now in the firing line as investors anticipating an end to quantitative easing in the US flee from debt-saddled economies, causing EM bond yields to spike and equity markets to tumble.

Investors are keen to avoid taking risk in emerging markets when returns from developed equity markets are expected to remain attractive.

As a result, the MSCI Emerging Markets index fell 6.58% in January, with some countries within the index seeing much bigger losses. Both the South African and Turkish MSCI indices were off 13% last month, while Russia was down 9.7%.

Developed markets have not been immune to this downturn, with the FTSE 100’s January gains wiped out in the last week to leave the index lower than it started 2013.

Investing around such a fast-moving event is difficult, and multi-managers have said they need a catalyst which could turn investor sentiment around before moving in.

Schroders’ multi-managers Marcus Brookes and Robin McDonald said emerging markets are starting to look interesting but are not as attractive as developed markets, despite the price falls.

Joe Le Jehan, a member of the investment team, said: “Things are getting cheaper, but the catalyst for why they should revert is not so obvious to us.”

The team has gradually been increasing its share in the JPM Global Consumer Trends Fund, which has around 30% in EMs, but is avoiding mainstream funds.

Fidelity Multi Asset Open Growth manager Ayesha Akbar said there are some “serious” issues impacting emerging markets, and upcoming elections to navigate, but added the scale of the falls means there could be some opportunities in the second half.

Henderson Global Investors’ multi-asset team agreed it is too soon to return to the region as there is no ‘catalyst’ to reverse recent falls, especially with the Fed continuing to taper.

However, it is clear the sell-off has left some regions – and specific companies – looking much cheaper.

Scott Spencer, portfolio manager working across Aberdeen Asset Management’s multi-asset funds, said countries and companies have navigated through worse situations than the current headwinds.

“The long-term case for investing in emerging markets remains unchanged, but obviously volatility is likely to continue in the short-term,” he said.

In a note to investors, emerging markets specialist Advance Emerging said the discount in valuations relative to developed markets following the sell-off is back to levels last seen in 2004.

“Historically, this has represented an exceptional entry point for patient, long-term, contrarian investors,” it said.

MSCI Emerging Markets index performance in January