More investors are adding emerging market exchange traded funds to their portfolios as a part of a diversified allocation strategy. Still, most tend to focus on the largest products out there, ignoring other potentially favorable investment opportunities.
The iShares MSCI Emerging Index Fund (NYSEArca: EEM) and the Vanguard Emerging Markets ETF (NYSEArca: VWO) have been the de facto, go-to investments for emerging market exposure as they both track the widely monitored MSCI Emerging Markets Index. [Three Emerging Market ETFs on an Uptrend]
The iShares Emerging Market fund has a 0.67% expense ratio and has 840 holdings. The ETF is up 5.1% year-to-date.
EEM’s sector allocations include financials 24.3%, information tech 13.5%, energy 13.0%, materials 11.4%, consumer staples 8.7%, telecom 8.3%, consumer discretionary 8.3%, industrials 6.7%, utilities 3.8% and health care 1.3%. Country allocations include China 17.0%, South Korea 15.4%, Brazil 13.1%, Taiwan 10.8%, South Africa 8.0%, India 6.4%, Russia 6.1%, Mexico 4.9%, Malaysia 3.8%, Indonesia 2.7%.
The Vanguard Emerging Market fund has a 0.20% expense ratio and has 901 holdings. The fund is up 5.4% year-to-date.
VWO’s sector allocations include financials 23.3%, tech 14.6%, basic materials 12.7%, consumer cyclical 8.0%, real estate 1.9%, communication services 8.2%, energy 11.5%, industrials 7.6%, consumer staples 8.0%, health care 1.0% and utilities 3.4%. Country allocations include China 17.4%, Korea 15.2%, Brazil 15.1%, Taiwan 10.9%, South Africa 7.4%, India 7.3%, Russia 7.1%, Mexico 4.4%, Malaysia 3.2%, Indonesia 2.8% and Thailand 2.0%.
Nevertheless, investors have other ETF options available, including:
The Powershares BLDRS Emerging Markets 50 ADR Index Fund (NYSEArca: ADRE) tracks the BNY Mellon Emerging Markets 50 ADR Index, which is comprised of 50 depositary receipts. ADRE has a 0.30% expense ratio and has 50 holdings. The fund is up 0.2% year-to-date.
The PowerShares emerging market ETF’s sector allocations include consumer discretionary 1.5%, consumer staples 8.2%, energy 22.8%, financials 16.7%, info. tech. 13.7%, materials 15.2%, telecom services 19.5% and utilities 2.4%. Top country allocations include Brazil 34.8%, China 17.7%, Taiwan 10.8%, Mexico 9.9%, South Korea 6.4%, India 5.1%, South Africa 5.0%, Hong Kong 3.4%, Colombia 2.0% and Chile 1.3%.
The Schwab Emerging Markets Equity ETF (NYSEArca: SCHE) follows large- and mid-cap stocks from the FTSE All Emerging Index. SCHE has a 0.25% expense ratio and has 621 holdings. The ETF is up 4.5% year-to-date