Investors appear to be embracing the ideas that the dollar will weaken this year and that the Federal Reserve will slow its pace of interest rate hikes or that no rate increases at all will be delivered in 2019. However, it is pivotal to the fortunes of funds such as IEMG and VWO that the U.S. and China resolve their trade dispute.
Related: 7 Indicators Reveal Underlying Weakness for China ETFs
While China exposure is a risk to consider with IEMG and VWO, the funds have other benefits, including low fees and solid exposure to other developing economies.
“Despite a relatively high allocation to Chinese stocks, they still effectively diversify stock-specific risks and charge some of the lowest fees in the category. While Chinese stocks account for roughly a third of these funds, they make up less than 4% of the total global stock market. So these funds can still be a great compliment to a portfolio that invests in stocks from the U.S. and foreign developed markets,” according to Morningstar.
For more information on global markets, visit our global ETFs category.