Picking Your Emerging Market ETF While They Are on Sale

“Investors who believe emerging markets are poised to rebound may be interested in DEMG, which seeks to identify and overweigh relatively valuable, high-quality emerging market stocks,  with relatively positive performance momentum and lower volatility,” Fiona Bassett, Head of Passive in the Americas, said in a press release.

Emphasizing these characteristics, or factors, can potentially help investors outperform traditional market cap-weighted indices.

“With the multi factor suite, there seems to be an inherent insurance policy in the fact that the underlying constituents have to qualify to be included,” Bush added. “If you don’t have a core EM, this might be a good alternative as it represents the five drivers of historical outperformance.”


Due to its multi-factor indexing methodology, DEMG will help investors diversify away from potential over-concentration risks associated with market capitalization-weighted index fund, which may hold up to 50% of its portfolio in China, South Korea and Taiwan. Instead, DEMG includes 16.5% South Africa, 15.2% China, 12.1% Taiwan, 8.6% Brazil, 8.6% Mexico, 7.6% India, 6.9% Malaysia, 4.2% Russia, Thailand 3.7% and Chile 3.1%.

Additionally, DEMG is less heavy on its top sector allocations, compared to the benchmark emerging market indices. The smart-beat ETF’s sector weights include financials 18.8%, consumer staples 14.1%, industrials 13.1%, consumer discretionary 8.8%, utilities 8.6%, materials 8.2%, information technology 7.7%, energy 6.5%, telecom 4.8% and health are 1.9%.