By Andrew Tanzer, Senior Associate Editor March 12, 2010 The growing gap in economic expansion between the world's rich and developing countries is clear. Gonzalo Pangaro, manager of T. Rowe Price Emerging Markets Stock Fund (symbol PRMSX), notes a similar polarization of performance and outlook among emerging economies. Pangaro, who was born in Argentina and is based in London, favors countries, such as Brazil and China, with healthy fiscal and trade balances. In his globally diversified fund, he's shying away from Eastern Europe, where finances are less sound.He's also focusing on populous emerging markets with expanding domestic demand for basic consumer goods and services. For example, Wal-Mart de Mexico is a large holding. He's a big fan of Mexico's América Móvil, which is to Latin America what China Mobile is to China. The fund, a member of the Kiplinger 25, has one-fourth of its assets in bank stocks, including Itaú Unibanco. The fund returned 84% over the past year as of February 15. Matthews Asia Dividend (MAPIX) is an intriguing fund. Yields are higher in Asia than in the U.S., earnings and dividends are growing faster, and several of the currencies, including the Chinese yuan, are under structural pressure to appreciate. This fund yields a juicy 4.5% and, as dividend-oriented funds have demonstrated elsewhere, the portfolio is much less volatile than a market index. Manager Jesper Madsen splits Asia Dividend's assets almost evenly among small, midsize and large companies (the fund can also invest in Japanese and Australian stocks). He prefers domestically oriented businesses (his current top five holdings are all Asian telecommunications operators, which tend to pay lush dividends and generate strong and stable cash flows). Over the past year, the fund returned 60%. The Price and Matthews funds both charge annual fees of 1.32%. If you seek a lower-cost way of investing in the developing world, consider Vanguard Emerging Markets Stock (VWO), an exchange-traded index fund that charges only 0.27% a year. Its one-year return: 72%.