Take advantage of growth opportunities in emerging markets. Emerging market exchange-traded funds come in many shapes and sizes. But not all funds that …
Take advantage of growth opportunities in emerging markets.
Emerging market exchange traded funds come in many shapes and sizes. But not all funds that offer overseas investments are worth your time or money. Investors may face two key challenges when trying to enter emerging markets: keeping fees low and finding investments large and liquid enough to buy and sell without complications. That said, many low cost index funds are price competitive, but still have billions of assets and a high average trading volume. Here are seven of the best emerging market ETFs to buy now.
ETF Vanguard FTSE Emerging Markets (symbol: VWO)
The largest emerging market ETF in terms of assets, VWO has total net assets of over $ 115 billion and owns more than 5,200 stocks worldwide. Admittedly, it is a bit too heavy. The 10 largest positions in the fund represent approximately 24% of the portfolio weight. More than 30% of the fund is dedicated to technology. “A well-diversified ETF like (the) Vanguard FTSE Emerging Markets ETF has delivered an annual return of 37% over the past year and a CAGR (compound annual growth rate) of 9% over the past five years with a good risk / reward ratio. due to exposure to economies like India, China, Taiwan and Brazil, ”said Nikhil Kamath, co-founder and chief investment officer of True Beacon, an asset management initiative client-aligned. If you’re looking for the largest and most liquid investment among emerging market ETFs, this fund is for you. And at just 0.1% annual spend – or $ 10 per year on each $ 10,000 invested – this is also one of the cheapest options.
IShares Core MSCI Emerging Markets ETF (GIGU)
Just behind in the list of the biggest and best ETFs in emerging markets, with over $ 81 billion in assets, is IEMG. The fund has a slightly smaller equity portfolio with around 2,600 positions. It’s a little more diversified geographically with around 13% exposure to South Korea and lower allocation to China than VWO at around 34%. It also has a slightly lower allocation in financials for a better distribution between sectors. “For investors who focus on low-cost investing, consider IEMG,” says Mark Andraos, associate portfolio manager at Regency Wealth Management in New York. “IEMG also captures small and mid-cap emerging market companies, allowing you to invest in nearly 99% of the companies in the total emerging market equity universe. The fund also comes with a low expense ratio of 0.11%.
Schwab Emerging Markets Equity ETF (DIAGRAM)
Although SCHE is smaller than the first large funds, having less total net assets and less holdings compared to VWO and IEMG, the fund is no slouch with over $ 9 billion in net assets. totals. The fund has a similar composition, with a focus on China and finances, but the list gets even narrower with around 1,600 components in total. In general, this means that this fund eliminates small names. This fact is evidenced by a weighted average market cap of around $ 168 billion for emerging market fund Schwab, while the Vanguard and iShares offerings both have a weighted average market cap of around $ 152 million. The focus on larger stocks, however, can be appealing if you’re looking for better capitalized players in admittedly riskier regions of emerging markets.
IShares JP Morgan USD Emerging Markets Bond ETF (EMB)
However, overseas investments don’t have to be limited to stocks. This emerging markets ETF includes bond investments in fast-growing regions, offering exposure to US dollar denominated debt issued by governments in emerging markets, including Saudi Arabia, Russia, Brazil and others, which helps reduce currency risk for American investors. As one of the premier emerging market debt ETFs, EMB is known to hold stable assets and its liquidity. No country represents more than around 3.99% of the portfolio’s weight, offering a diversified game on sovereign debt in emerging markets. And unlike corporations, these governments have the power to tax and use central banks to prevent insolvency and ensure that those debts are paid. One last thing to interest investors: the fund returns 3.85%.
SPDR Emerging Markets ETF Portfolio (SPEM)
SPEM is one of the best ETFs in emerging markets, offering broad exposure to emerging market equities. The fund tracks the S&P Emerging BMI Index, which captures companies with a market capitalization of at least $ 100 million. It has over $ 6 billion in assets under management and offers a low expense ratio of 0.11%. The fund owns around 2,600 stocks and favors the financial sector with a weighting of around 19%, followed by nearly 17% allocated to consumer discretionary stocks. Some of the main countries in the fund are China, Taiwan and India. SPEM’s performance is roughly in line with its competitors, IEMG and VMO, and is another great alternative for exposure to emerging market equities outside of South Korea.
IShares MSCI Emerging Markets ETF (ESEE)
EEM is one of the largest emerging market tracking ETFs. The fund offers exposure to large and medium sized equities. While EEM has a higher expense ratio than its competitor VWO, at 0.7%, the fund is a liquid investment since there is an average daily trading volume of over 30 million. This iShares fund holds around 1,200 stocks with its main positions in Taiwan Semiconductor Manufacturing (TSM) and Alibaba Group Holding (BABA). EEM tracks the MSCI Emerging Markets Index and its portfolio includes South Korean Choices, a country excluded by competitor VWO.
IShares MSCI Brazil ETF (EWZ)
A very different approach to investing in emerging markets is to focus on a specific geography. And one of the most popular emerging market-specific ETFs is this Brazil-centric offering which has around $ 6 billion in total assets and an average volume of almost 28 million shares per day. This makes it more popular than some of the world-focused emerging market ETFs on Wall Street. Its 55 or so participations include not only megaminator Valley (VALLEY), which you can buy in a conventional stock account, but also smaller choices that you might not be able to access otherwise. The fund comes with an expense ratio of 0.59%.
Seven emerging market ETFs to consider:
– Vanguard FTSE Emerging Markets ETF (VWO)
– iShares Core MSCI Emerging Markets ETF (GIGU)
– Schwab Emerging Markets Equity ETF (DIAGRAM)
– iShares JP Morgan USD Emerging Markets Bond ETF (EMB)
– SPDR Portfolio Emerging Markets ETF (SPEM)
– iShares MSCI Emerging Markets ETF (ESEE)
– iShares MSCI Brazil ETF (EWZ)
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Update 09/07/21: This story was posted at an earlier date and has been updated with new information.