What Constitutes an Emerging-market ETF?
October 4th at 4:09pm by Tom Lydon
Emerging-market exchange traded funds (ETFs) are attractive to investors because their countries’ economies grow at faster rates than the developed countries, which is reflected in the ETFs’ performance. However, the down side to emerging-market ETFs is that they tend to be more volatile. But at what point are emerging markets considered "emerged?"
As of 2006, the World Bank defined an "emerged" economy as one having Gross National Income (GNI) per capita of $10,725 or more and a population greater than 1,000,000. By that definition, China and Thailand are emerged countries, and South Korea and Taiwan are still emerging. In reality, there is no clear-cut definition for when a country suddenly crosses the threshold into emerged territory, according to an article in the Matthews International Capital Management newsletter. It’s more of an ongoing process. China, for example, has the fourth largest economy in the world, yet its economy is undergoing a massive transformation. For those investors interested in some emerging-market ETFs, consider these with their performance year-to-date:
