Emerging market countries are spearheading the recovery in the global economy and providing returns upwards of 50% this year in related exchange traded funds (ETFs). But the definition of what makes an emerging market varies from index to index.

An emerging market economy is one “that is progressing toward becoming advanced, as shown by some liquidity in local debt and equity markets and the existence of some form of market exchange and regulatory body,” Investopedia notes. (Why invest in emerging market ETFs?)

According to Credit Suisse Portfolio Strategy, there will be some changes to the MSCI Emerging Markets Index effective Nov. 30 at the close. The findings include:

  • 32 additions, 11 of which are in Brazil and 7 in China, to the index and 19 deletions.
  • Brazil is expected to account for almost 40% of total trading EM trading.
  • Israel will have one add and one delete, which is only a listing switch from the NYSE to TASE.
  • One-way turnover is projected to be 1.62%.
  • An estimated $2.8 billion in total trading is expected by MSCI EM Standard trackers, with around 82% of gross trades attributed to additions and downweights that are primarily led by Brazil and China.
  • Largest country net sells are from Taiwan at -$155 million and Korea at -$74 million.

The MSCI Emerging Markets Index is tracked by the ETF iShares MSCI Emerging Markets (NYSEArca: EEM). MSCI has taken a looser meaning of the existing “body” in an emerging market and included Taiwan, South Korea, Israel in its index. (Competition heats up in emerging market ETF space). Not everyone agrees that these economies are “emerging.”

Emerging Global Advisors provides an alternative emerging market ETF called Emerging Global Shares Dow Jones Emerging Markets Titans Composite ETF (NYSEArca: EEG), which excludes Taiwan, South Korea and Israel, which are now commonly viewed as developed by the IMF and the Dow Jones Indexes. Some feel that any pure play on emerging markets would not include these countries. (ETF Spotlight: EEG).

When investing in emerging markets, it’s wise to be aware of the definitions various indexes provide when it comes to these growing economies. As with all ETFs, look under the hood to be sure that the exposure you’re getting is the exposure you want.

For more information on emerging markets, visit our emerging markets category.

Other emerging market ETFs available include broad global economies or more niche themes:

  • Vanguard Emerging Markets (NYSEArca:VWO)
  • iShares MSCI Emerging Markets Eastern Europe Index Fund (NYSEArca: ESR)
  • Emerging Global Shares DJ Emerging Markets Energy Titans (NYSEArca: EEO)
  • EGS Emerging Markets Metals & Mining Fund (EMT)
  • Dow Jones Emerging Markets Financial Titans Index Fund (NYSE Arca: EFN)

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.