The most popular emerging markets ETF is the iShares MSCI Emerging Markets Index Fund (EEM), which has nearly $40 billion in assets and has seen cash inflows of more than $3.5 billion so far this year. But investors looking for exposure to emerging markets through ETFs should be aware that EEM, while liquid and efficient, has some material drawbacks. This ETF has an expense ratio more than 2.5 times comparable funds tracking identical benchmarks (such as VWO), and only holds about half of the individual stocks that make up the underlying index.
Emerging Markets ETF Center
Welcome to the ETF Database Emerging Markets ETF Center, home to valuable resources for investors looking to gain exposure to emerging market stocks and bonds through ETFs. The ETF Database Emerging Markets ETF Center is sponsored by Emerging Global Advisors, a leading investment research firm and issuer of innovative exchange-traded products offering unique exposure to emerging markets.
Based on its classification system that considers (1) per capita income, (2) export diversification, and (3) degree of integration into the global financial system, the International Monetary Fund (IMF) announced more than ten years ago that Taiwan, South Korea, and Israel were classified as developed markets. So it may come as a surprise to some investors that stocks listed in these countries account for almost 25% of the two largest emerging markets ETFs, the iShares MSCI Emerging Markets Index Fund (EEM) and the Vanguard Emerging Markets ETF (VWO).
Although oil prices remain far below all time highs, crude has seen a significant run-up in prices over the last several months. But unlike previous periods of rapid oil price appreciation, shares of domestic energy companies have been held in check this time around, moving sideways despite a theoretically more favorable environment.
As the ETF industry has blossomed in the U.S., the number of fund options has expanded rapidly, leaving investors with numerous options when allocating the domestic equity portion of their portfolios. According to the ETF Database Screener, there are currently almost 400 U.S. equity ETFs, resulting in significant overlap between many funds. Investors looking for a financials ETF have more than 20 funds to choose from, while those looking to invest in the technology sector have 28 different ETF options.
Following a wave of massive writedowns, record losses, and even closures at financial institutions across developed markets, emerging markets banks have taken on a new importance in the global financial sector. A decade ago, the list of the world’s largest banks included none from emerging markets. Today, China is home to the three largest banks by market capitalization in the world, and four of the top ten.
