Emerging Markets ETF Winners

This month’s ETFs First Cut screened the field of emerging markets ETFs to identify those that have outperformed their category peers on a one- and three-year basis.

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Emerging markets represent countries with younger and generally less developed economies. Since many also have younger and growing populations, they offer the potential for higher levels of long-term economic growth.

There is not a large number of exchange-traded funds (ETFs) targeting emerging markets in a diversified manner. In AAII’s universe of ETFs, the diversified emerging markets category encompasses 76 ETFs. This compares to the broader universe of nearly 2,400 ETFs listed in total on U.S. exchanges.

This month’s ETFs First Cut screened the field of emerging markets ETFs to identify those that have outperformed their category peers on a one- and three-year basis. A total of 24 funds passed. Adding a filter to exclude leveraged and inverse funds did not impact the results. The list is ranked by one-year return.

Seven of the passing funds had less than $100 million in total assets. Two had less than $10 million assets. ETFs with such low levels of assets typically have a high level of risk of being closed.

Relative to their mutual fund counterparts (which can be seen in this month’s Funds First Cut), the expense ratios for these ETFs are low. More than half have expense ratios below 0.50%. This may be attributable to the fact that nearly all of the passing ETFs track an index. ▪

Discussion

John D from OH posted over 5 years ago:

Can you explain how the the diversification analyzer works and how you know which stocks in your portfolio fit into each category? For instance how do I know which stocks are in the International category? I did a portfolio which just mid cap stocks and the diversification analyzer has 46% in the large cap stock category. I even checked the Market Cap for every entry to make sure of the category.


ROBERT M from VA posted over 5 years ago:

I think an emerging markets ETF is an important part of a balanced portfolio. Since China is still classified as an emerging market, I'm sure that the higher percentage of China stocks in the above ETFs, the better their performance.


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