The emerging markets have staged a strong rebound this year and look to maintain their momentum. However, not all developing countries are the same, and ETF investors may find varying opportunities among the various regions.
“Emerging markets are not homogenous in our opinion and we believe it is important to take a targeted approach to selecting the equity opportunities that do exist. Within EM, we are particularly focused on select market segments in Asia ex-Japan, including China and India,” according to a BlackRock research note.
Investors who are interested in gaining exposure to the growth opportunity in the Southeast Asia region can look to various ETF options, such as he iShares MSCI All Country Asia ex Japan ETF (NYSEArca: AAXJ), which excludes Japanese and Australian stock exposure and tilts toward more emerging economies, including China 39.0%, Korea 17.6%, Taiwan 13.5%, India 9.8%, Hong Kong 5.8%, Singapore 4.0%, Indonesia 2.6%, Thailand 2.5%, Malaysia 2.5% and Philippines 1.3%.
Additionally, the SPDR S&P Emerging Asia Pacific ETF (NYSEArca: GMF) provides broad exposure to emerging economies in the Asian Pacific, including China 47.3%, Taiwan 20.7%, India 18.1%, Thailand 4.1%, Malaysia 3.6%, Indonesia 3.6%, Philippines 1.8%, Hong Kong 0.5%, Pakistan 0.3% and Singapore 0.1%.
Investors can also gain more targeted exposure to emerging countries, including China and India, through country-specific ETFs. For example, the iShares China Large-Cap ETF (NYSEArca: FXI) is the largest China-related ETF and tracks Chinese companies listed on the Hong Kong stock exchange. Similarly, other China H-shares ETFs options include the SPDR S&P China ETF (NYSEArca: GXC) and the iShares MSCI China ETF (NYSEArca: MCHI).