Emerging Markets ETF

Emerging markets ETFs are trade-able securities that combine assets from a number of emerging markets, including those in the Middle East, Asia, Latin America, Eastern Europe, and Africa. Also known as an international markets ETF or a global ETF, a broad emerging markets ETF typically comprises a number of large cap securities from the region or country and tracks the market capitalization indexes for that area. Most emerging markets ETFs are broad international markets ETFs; they typically incorporate stocks from banking institutions, energy corporations, commodities traders, and high-tech sectors of the market. Some emerging markets ETFs offer a wide geographical distribution for optimal diversification, while others concentrate on one or two regions in order to provide a more focused financial option for investors; the latter are typically referred to as regional emerging markets ETFs and allow investors to more precisely tailor their investment portfolio.

A word of warning

While an emerging markets ETF can provide much needed diversity to the overall investment portfolio, these securities are subject to significant risks due to the volatility of the financial markets in emerging economies. Additionally, the economic policies and controls instituted by certain countries can create even more risk for the individual investor, so emerging markets ETFs should be used sparingly and with caution in order to obtain maximum benefits without excessive risk.

Emerging markets ETF list

Especially considering the volatile nature of the emerging market economies, it is not possible to provide a comprehensive listing of all emerging markets ETFs. However, here are some of the most important entries in the emerging markets ETF sector.
  • Vanguard Emerging Markets ETF (VWO)
  • WisdomTree High Yielding Emerging Market Index Fund (DEM)
  • iShares MSCI Emerging Markets Index Fund (EEM)
  • iShares S&P Latin America 40 Index Fund (ILF)
  • iShares MSCI BRIC Index Fund (BKF)
  • iShares MSCI Emerging Markets Eastern Europe Index Fund (ESR)
  • Direxion Daily Latin America 3X Bull Shares (LBJ)
  • Direxion Daily Latin America 3X Bear Shares (LHB)
  • SPDR S&P Emerging Markets ETF (GMM)
  • SPDR S&P Emerging Latin America ETF (GML)
  • SPDR S&P Emerging Europe ETF (GUR)
  • SPDR S&P Emerging Middle East & Africa ETF (GAF)

Best emerging markets ETFs

For global ETFs in emerging markets, the Vanguard Emerging Markets ETF offers exceptionally low costs and a broad overview of regions and countries including Brazil, China and South Korea. Another strong competitor among the best emerging markets ETFs is WisdomTree's High-Yielding Emerging Market Index Fund; both these ETFs offer strong exposure and a good mix of assets for investors. Single-country emerging markets ETFs generally are more expensive to manage and provide less exposure and diversification for investors, but can allow a better measure of control for those who can pinpoint growth areas accurately.
Tim Ord
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