Investors looking for broad-based, cost-effective emerging markets exposure in 2020 have plenty of ETFs to consider, including the iShares Core MSCI Emerging Markets ETF (NYSEArca: IEMG), one of the fastest-growing funds in the category.
JPMorgan also highlighted “pockets of opportunity,” adding that “with the global economy stabilizing and trade escalation less likely, EM equity performance should be positive in absolute terms as these confidence variables add a bit to returns.”
Investors are increasingly emphasizing low cost a prime motivator for allocating capital in 2019, which makes ETFs like IEMG an attractive option. The fund provides this core EM exposure at a paltry 0.14 percent expense ratio.
IEMG tracks the cap-weighted MSCI Emerging Markets Investable Market Index and holds over 2,200 stocks. IEMG debuted in October 2012 as part of the iShares lineup of core ETFs targeted at cost-conscious buy-and-hold investors.
“Geographically speaking, IEMG presents some concentration risk as China, Taiwan and South Korea combine for 56% of the fund’s weight. Fortunately, President Donald Trump appears intent on repairing the trade relationship with China and the Fed Reserve is unlikely to raise rates in 2020,” according to InvestorPlace.
Bright Future For Emerging Markets
When it comes to emerging markets (EM) exposure, certain market experts say the future is bright, but challenges do remain thereby making EM a risky proposition heading into 2020 despite a U.S.-China “phase one” trade deal seemingly in place.
“A final issue for so-called emerging markets will be their equity market valuations,” reports the South China Morning Post. “As matters stand, emerging-market equities are generally inexpensive – and, by some measures, quite attractive – relative to equity and bond markets globally. If Trump decides to play nice, the Fed remains a benign influence and China stabilizes its annual growth rate just below 6 percent, emerging-market equities could do rather well in 2020.”
The $61.84 billion IEMG holds nearly 2,500 stocks, over 41% of which hail from the financial services and technology sectors. Consumer discretionary and communication services names combine for a quarter of the fund’s weight.
IEMG charges just 0.14% per year, or $14 on a $10,000 investment.
For more information on global markets, visit our global ETFs category.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.