As world economies continue to globalize operations and trade, poorer countries are beginning to represent a higher portion of global GDP. That sounds like good news for emerging market exchange traded funds (ETFs).
According to Catherine Rampell of Economix, developing countries are on track to account for 57% of world GDP by 2030. In 2000, that figure was at 40%. In 2010, it increased to 49%. The numbers are based on research done by the late Angus Maddison. [Emerging Market ETFs: Growing Power On Two Fronts.]
Just look at this chart to see how it’s all changed, and how much more it’s expected to change:
The Organization for Economic Cooperation and Development (OECD) said, “[T]he economic and financial crisis is accelerating this longer-term structural transformation in the global economy.”
This underscores the importance of having a global allocation in your portfolio. While the United States still boasts a large economy, two-thirds of the world’s market cap lies outside our borders. [What You’re Missing When You’re Not Investing Globally.]
If you’re interested, check out these funds that track emerging markets. To see more emerging market ETFs, hop on over to our ETF Resume and type “emerging” into the search box and a list of funds will pop up!
- SPDR S&P Emerging Markets Small Cap ETF (NYSEArca: EWX)
- WisdomTree Emerging Markets Small Cap Div (NYSEArca: DGS)
- Emerging Global Shares Emerging Markets Large Cap (NYSEArca: EEG)
- Vanguard Emerging Markets (NYSEArca: VWO)
For more stories on emerging markets, visit our emerging market category.
Sumin Kim 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.