Reviewing a Titan Among Emerging Markets ETFs

VWO “tracks the return of the FTSE Emerging Markets All Cap China A Transition Index. The ‘transition’ basically refers to the fact that, as Vanguard words it, the ETF ‘over time will build exposure to small-capitalization stocks and China A-shares.’ However, they are doing so in a manner, which will minimize the transaction costs associated with this endeavor,” according to a Seeking Alpha analysis of the ETF.

A number of factors support the emerging market outlook. For instance, the global economy is stabilizing, notably a steadier China, has helped diminish some of the cyclical headwinds and improved the near-term outlook for many developing countries, according to Fidelity.

Global trade and manufacturing activity have also picked while commodity prices improved, contributing to more favorable outlook for the emerging market business cycle and corporate earnings outlook.

VWO “currently contains a whopping 4,300 holdings, with the Top 10 comprising a mere 16.50% of its assets” and “carries an expense ratio of .15%, once again impressive for an ETF which provides exposure to emerging markets, with all associated trading costs,” according to Seeking Alpha.

For more information on the developing economies, visit our emerging markets category.