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This is where the 'smart money' is going, trader says

Michelle Fox

Now is a good time to be looking at emerging markets since their valuations are attractive relative to the U.S. market, strategist Luciano Siracusano told CNBC on Tuesday.

It's a trade that's been picking up steam — with more than $11 billion flowing into emerging markets ETFs in the first quarter, he pointed out.

"People are hedging because if you don't get a Trump fiscal plan, the other side of that trade really is emerging markets," the chief investment strategist for WisdomTree Investments said in an interview with " Closing Bell. "

"It means likely interest rates don't go higher in the U.S., dollar doesn't get stronger. EM currencies are likely to continue to rally in that kind of environment and that's good for EM equity."

Trader Peter Costa, president of Empire Executions and a CNBC contributor, said that would be his play.

"That's where money is going — and smart money. It's not the dumb money. There's dumb money out there. The dumb money was the money that was buying a couple of weeks ago," he told "Closing Bell."

In fact, he has been saying for months the market needs to correct. And he thinks geopolitical risks, like tensions with North Korea, are still an issue.

"You look at the news overnight … they're all saying there's more and more tension. The geopolitical risk is expanding, it's growing. And I still think it is. I still that's going to be something we're going to have to watch," Costa warned.

U.S. stocks closed lower on Tuesday as those geopolitical concerns weighed on investors, who pushed safe-haven assets higher.

— CNBC's Fred Imbert contributed to this report.