Four emerging markets exchange trade funds can be found among the top 10 non-leveraged ETFs on a year basis. Three are on the 10 worst, but even with that split decision of sorts, the consensus is that emerging markets ETFs are ready to take on leadership roles in the current quarter.

After largely under-performing developed markets over the past couple of years, some argue that emerging markets may begin pulling ahead, reports Dhara Ranasinghe for CNBC.

Previous laggards can rebound to become winners and that is the thesis some are applying to the second-quarter outlook for emerging markets stocks. Nomura adds that emerging markets growth expectations are so low that the potential for upside surprises exists and that hard currency levels around the emerging world “are generally manageable.” [EM ETFs Could Lead in Q2]

Investors can a more refined, tactical approach to a recovery by emerging markets ETFs with the JPMorgan Diversified Return Emerging Markets Equity ETF (NYSEArca: JPEM), which debuted in January.

The new ETF tracks the FTSE Emerging Diversified Factor Index, a strategic beta index that seeks to mitigate regional and sector risk by using “a multi-factor stock filter to rank and select stocks based on value, quality and momentum.” [New EM ETFs Challenges Old Rivals]

“The index is designed to reflect the performance of emerging market securities representing a diversified set of factor characteristics. Constituents are selected based on a composite factor score. The composite factor spans Value, Price Momentum Earnings Revisions and Quality characteristics,” according to FTSE.

JPEM shares some traits in common with rival diversified emerging markets ETFs, including a large combined weight to Chinese and Taiwanese equities. Those countries combine for over 39% of JPEM’s geographic weight. However, investors should note that as is the case with the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO), JPEM tracks a FTSE index, meaning South Korean stocks are not found in this fund because the index provider classifies Asia’s fourth-largest economy as a developed market.

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