What is the best value emerging markets ETF?

SPDR S&P Emerging Markets Dividend ETF (EDIV) is a solid performer in the world of emerging markets value ETFs. In the past year, investors in this ETF have earned a 34.28% return.

Does Vanguard have an emerging markets ETF?

Yes. The Vanguard FTSE Emerging Markets ETF (VWO) invests in emerging markets, including China, Brazil, Taiwan and South Africa. It's an index fund that tracks the performance of the FTSE Emerging Markets All Cap China A Inclusion Index.

Which is better: VXUS or VWO?

The Vanguard Total International Stock ETF (VXUS) and the Vanguard FTSE Emerging Markets ETF (VWO) track different indices and have different objectives, so which one is better for you will depend on your objectives and the other investments in your portfolio. VXUS invests in the stock of companies outside the United States, in developed and developing countries, while VWO invests in emerging markets only.

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7 Best Emerging Markets ETFs for 2024

February 20, 2024

7 min Read

Written by Karen Doyle

Edited by Susan Kim

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Investing in 2024 has already been an adventure, and that’s likely to continue. The market is at an all-time high and shows no signs of slowing down. Where’s the best place to put your money to take advantage? One investment to look at is emerging markets ETFs.

Check Out: 3 Things You Must Do When Your Savings Reach $50,000

What Are Emerging Markets?

Emerging markets are those countries that are in the process of moving from developing economies into developed economies. There is typically a lot of room for growth in these economies, but there can also be considerable volatility.

There is some debate about which countries are considered emerging markets, and the group can change. The MSCI Emerging Markets index includes two dozen countries, including China, India and Taiwan, among others.

The Best Emerging Markets ETFs

Emerging markets ETFs can include investments from some or all of the emerging market countries, or they may include investments from only one country. Here are some emerging markets ETFs to consider for 2024:

SPDR S&P Emerging Markets Dividend ETF (EDIV)
Franklin FTSE India ETF (FLIN)
Global X MSCI Argentina ETF (ARGT)
Franklin FTSE Taiwan ETF (FLTW)
iShares Core MSCI Emerging Markets ETF (IEMG)
SPDR Portfolio Emerging Markets ETF (SPEM)
Vanguard FTSE Emerging Markets ETF (VWO)

1. SPDR S&P Emerging Markets Dividend ETF (EDIV)

SPDR S&P Emerging Markets Dividend ETF tracks the index of 100 high-yielding emerging market common stocks. These are dividend-paying, or value, stocks. Top holdings include Power Grid Corporation of India Ltd., Hero MotoCorp Ltd., NTPC Ltd. and Malayan Banking Berhad.

SPDR S&P Emerging Markets Dividend ETF has returned 34.28% in the last 12 months, compared to the benchmark for the category of 0.35%.

2. Franklin FTSE India ETF (FLIN)

Franklin FTSE India ETF tracks the FTSE India Capped Index, which is based on the FTSE India Index and measures the performance of large- and mid-cap stocks in India. FLIN has returned 30.58% in the past 12 months, slightly better than the category benchmark of 28.35%.

FLIN is less dependent on a single company than some emerging markets ETFs, as it invests less than 8% in any single stock. Its top holdings include Reliance Industries Ltd. (7.98%), HDFC Bank Ltd. (5.74%), Infosys Ltd. (4.88%), Tata Consultancy Services Ltd. (3.27%) and Bharti Airtel Ltd. (12.27%). It has significant investments in the financial services (21.42%), technology (13.31%) and energy (12.45%) sectors.

3. Global X MSCI Argentina ETF (ARGT)

Global X MSCI Argentina ETF is a large-cap growth fund, based on the MSCI All Argentina 25/50 index. It holds investments in Argentinian companies in the consumer cyclical (32.73%), financial services (15.37%), basic materials (11.87%) and energy (11.38%) sectors, among others. Its largest holding is MercadoLibre Inc., which makes up 22.95% of the fund, followed by YPF Sociedad Anónima at 7.19% and Grupo Financiero Galicia S.A. at 7.11%.

ARGT has returned 27.73% in the past 12 months.

4. Franklin FTSE Taiwan ETF (FLTW)

Taiwan is one of the bright lights in Asia at the moment, and the Franklin FTSE Taiwan ETF has returned 17.35%, vs. a China region category benchmark of -29.50%. This fund tracks the FTSE Taiwan Capped Index.

The largest holding in FLTW is Taiwan Semiconductor Manufacturing Co. Ltd. at 21.72%, followed by MediaTek Inc. (5.29%), Hon Hai Precision Industry Co. Ltd. (4.50%) and Quanta Computer Inc. (2.49%). The technology sector dominates this fund at 63.42% of holdings, followed by financial services (17.46%) and basic materials (5.63%). Other sectors represent less than 5% of holdings each.

5. iShares Core MSCI Emerging Markets ETF (IEMG)

IShares Core MSCI Emerging Markets ETF has returned 5.01% in the past 12 months. This fund tracks the MSCI Emerging Markets Investable Market Index. It includes investments in technology (21.65%), financial services (20.54%), consumer cyclical (12.11%) and other sectors. Top holdings include Taiwan Semiconductor Manufacturing Co. Ltd., Samsung Electronics Co. Ltd., Tencent Holdings Ltd., Alibaba Group Holding Ltd. and Reliance Industries Ltd.

6. SPDR Portfolio Emerging Markets ETF (SPEM)

SPDR Portfolio Emerging Markets ETF is very broad, as it tracks a float-adjusted market cap weighted index of the total investable universe of publicly traded companies in emerging markets. SPEM has returned 4.79% in the past 12 months, compared to 0.35% returned by the diversified emerging markets category.

SPEM’s top holdings include Taiwan Semiconductor Manufacturing Co. Ltd., Tencent Holdings Ltd., Alibaba Group Holding Ltd., Reliance Industries Ltd. and HDFC Bank Ltd. The top sectors in this fund include financial services (22.77%), technology (18.09%) and consumer cyclical (11.41%). Other sectors make up less than 10% of investments each.

7. Vanguard FTSE Emerging Markets ETF (VWO)

Vanguard FTSE Emerging Markets ETF samples the FTSE Emerging Markets All Cap China A Inclusion Index. This means that the fund approximates the index by holding a broadly diversified collection of securities. Over the past year, VWO has returned 3.76%, compared to the category benchmark of 0.35%.

The fund’s top holdings include Taiwan Semiconductor Manufacturing Co. Ltd. (5.85%), Tencent Holdings Ltd. (2.91%), Alibaba Group Holding Ltd. (2.05%), Reliance Industries Ltd. (1.55%) and HDFC Bank Ltd. (1.11%). The fund has 21.90% invested in financial services, 18.18% in technology and 11.83% in the consumer cyclical sector.

What Are ETFs?

Exchange-traded funds are baskets of securities, like mutual funds, meaning that they include the securities of many different companies. Investors buy a share in the fund, effectively buying proportional shares in each of the underlying companies.

Some ETFs are professionally managed by investment advisors, who buy and sell positions within the fund according to how they think those companies will perform. Other ETFs are passively managed, which means they track to an index of stocks. These funds will perform roughly the same way the index does and often have lower fees.

ETFs trade like stocks, which means that the price is determined by how much someone will pay for it, and they are priced throughout the trading day. Mutual funds, on the other hand, are priced at the end of the day.

How To Invest In Emerging Markets ETFs

Exchange-traded funds are traded on exchanges like stocks. To buy and sell them, you’ll need a brokerage account where you can purchase ETFs. Since these ETFs are traded on U.S. stock exchanges, they’re available on most brokerage platforms. Identify those you are interested in and compare their asset mixes to your other investments.

As is the case with any investment, past performance is not indicative of future results, and this is particularly true with emerging markets investments. When investing in emerging markets, whether you’re buying ETFs or American depositary receipts (ADRs, or certificates that represent shares in a foreign company that are traded on U.S. stock exchanges), it’s important to pay attention to what is happening in the countries where you’re invested. This means, in addition to watching the movement of the fund itself, it’s wise to pay attention to what is going on in the countries you’re invested in from a geopolitical standpoint. This is particularly true if you’re buying a single-country ETF or one in which the positions are concentrated in a single region, such as Asia.

FAQ

What is the best value emerging markets ETF?
- SPDR S&P Emerging Markets Dividend ETF (EDIV) is a solid performer in the world of emerging markets value ETFs. In the past year, investors in this ETF have earned a 34.28% return.
Does Vanguard have an emerging markets ETF?
- Yes. The Vanguard FTSE Emerging Markets ETF (VWO) invests in emerging markets, including China, Brazil, Taiwan and South Africa. It's an index fund that tracks the performance of the FTSE Emerging Markets All Cap China A Inclusion Index.
Which is better: VXUS or VWO?
- The Vanguard Total International Stock ETF (VXUS) and the Vanguard FTSE Emerging Markets ETF (VWO) track different indices and have different objectives, so which one is better for you will depend on your objectives and the other investments in your portfolio. VXUS invests in the stock of companies outside the United States, in developed and developing countries, while VWO invests in emerging markets only.

Data is accurate as of Feb. 19, 2024, and is subject to change.

Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.

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