Last Monday’s sell-off knocked the wind out of many riskier market plays, including emerging markets. Naturally, this led to strong outflows for many funds providing emerging market exposure.
However, signs of life are already starting to grow. For example, the MSCI Emerging Markets IMI is en route to recover to pre-selloff levels, according to the YCharts data below.
Though the Monday sell-off may have made investors reconsider more volatile assets, emerging markets carry the benefit of diversification. By adding international exposure, investors can help curate a portfolio that possesses less correlation to traditional asset classes.
Gathering Emerging Market Exposure
While emerging markets naturally carry a greater deal of risk, careful investors can use an established strategy to get ahead of market recovery in the sector. One such fund may be the iShares Core MSCI Emerging Markets ETF (IEMG ).
IEMG aims to provide investors with similar results to the previously mentioned MSCI Emerging Markets IMI. This index measures large-, mid-, and small-cap performance of equities within emerging markets.
Following an established strategy, IEMG is a low-cost alternative to the iShares MSCI Emerging Markets ETF (EEM ). With a net expense ratio of only 0.09%, IEMG can be a cost-efficient means to bolster emerging market equity exposure across the cap spectrum.
Among emerging market options, some countries may have more valuable return potential than others. Recent weekly commentary from BlackRock noted that valuations for India and Taiwan are looking promising.
Anticipation for India and Taiwan’s performance is reflected in IEMG’s holdings. Along with China, both India and Taiwan rank among the countries with the largest exposure within the fund.
Within IEMG’s portfolio, investors can access strong companies that are based in emerging markets but have strong international exposure. Among others, this includes TSMC, Tencent, and Samsung Electronics.
IEMG remains one of the largest ETF strategies within the emerging market sector, indicating that investors remain confident in the strategy. Even though the fund suffered some outflows during the sell-off, IEMG still has over $77 billion in assets under management.
For more information, please visit VettaFi.com | ETF Trends.
