Moreover, due to our current globalized economy, investors even find emerging market exposure through indirect methods.
“Many companies located in the developed world derive a significant portion of their revenue from the emerging world, while the reverse holds true for many companies headquartered in EMs,” the analysts said. “As companies expand their footprint globally, their revenues become more diversified. You need not invest in an EM-domiciled country to benefit from EM growth.”
The iShares MSCI Emerging Markets ETF (NYSEArca: EEM) and the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO) are the two largest emerging market ETFs on the market. Additionally, investors can consider a small-cap oriented ETF like the WisdomTree Emerging Markets SmallCap Dividend Fund (NYSEArca: DGS).
On Tuesday, the iShares EEM ETF finally broke out of its six day losing streak as the Chinese government revealed an expanding manufacturing sector, bolstering the outlook on global growth, Bloomberg reports.
“Emerging markets are still a source of global growth,” Walter “Bucky” Hellwig, a manager at BB&T Wealth Management, said in the Bloomberg article. Developing market stocks “were so oversold that some money came in to take advantage of the bounce.”
For more information on developing economies, visit our emerging markets category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own EEM.