As we re-evaluate our investments for the new year, ETF investors should reconsider emerging market exposure to diversify their portfolios.

Armando Senra, who runs iShares Americas for BlackRock, sees increasing “interest in China,” which was “always a good play” to include in a portfolio, CNBC reports.

“That said, for 2020, I would pivot to emerging markets,” Senra told CNBC. “There’s more room for growth with a pickup in growth globally. You also have the benefit of the availability to make changes in monetary policy. They still have room to move, especially emerging markets ex-China.”

Senra argued that developing economies have greater flexibility when it came to monetary policy and could potentially benefit “from a more stable trading environment” around the world.

For broad developing market exposure, investors can look to something like the iShares Core MSCI Emerging Markets ETF (NYSEArca: IEMG), the second largest EM-related ETF by assets.

Chinese Growth Opportunity

John Davi, founder and chief investment officer of Astoria Portfolio Advisors, also looked into emerging markets, with a specific focus on the growth opportunity in Chinese markets.

“I think that for EM to work, China has to work,” Davi told CNBC, adding that China’s expected earnings per share growth for 2020 is higher than that of the United States. “China’s injecting a lot of liquidity into the system. So, we use MCHI in our portfolio, [and]that’s one of our top picks.”

Davi was referring to the iShares MSCI China ETF (NASDAQ: MCHI), the largest China-related ETF by assets. MCHI tracks the benchmark MSCI China Index, providing investors with exposure to large- and mid-sized companies in China with a particular tilt toward consumer discretionary and communication services names like Alibaba and Tencent, among others.

“On a multiyear basis, you have more upside overseas than you do here in the U.S.,” Davi added. “The trade of the decade has been large-cap U.S. stocks, large-cap growth, so, ultimately, capital gets allocated to look for the highest return per unit of risk. I think there’s a lot of risk in the U.S. large-cap growth market, so, I’d look overseas if I’m investing on a multiyear basis.”

For more information on global markets, visit our global ETFs category.