“Countries represented in the index represent 24% of the world’s population, but just 12% of the world’s GDP and 8% of the world’s equity market cap,” according to Global X, indicating that as a satellite position for patient, risk-tolerant investors, EMFM has potential.
While EMFM is one of the few ETFs with exposure to what may appear to be rough and tumble markets such as Pakistan, Bangladesh, Gabon and Laos, the fund’s overall exposure to such markets is small relative to the aforementioned emerging markets. EMFM also diminishes single stock risk by nto devoting more than 1.5% of its weight to any of its roughly 200 holdings.
Two knocks on the fund are its combined 30% weight to materials and energy stocks and its small weights to consumer-related and technology shares. In the three-year period ending Dec. 31, 2013, sectors that trumped the MSCI Emerging Markets Index included technology, consumer staples and discretionary. Laggards included financials, energy and materials, which combine for half of EMFM’s weight. [An Emerging Markets Value Proposition]
Global X Next Emerging & Frontier ETF