Get Emerging Markets Exposure Down to the Core with”IEMG”

As global economies slowly start to open their doors again after the Covid-19 pandemic, opportunities in emerging markets (EM) are presenting themselves to investors willing to take on the risk. One such fund for core EM exposure is the iShares Core MSCI Emerging Markets ETF (NYSEArca: IEMG).

“As the Covid-19 pandemic continues to strike countries around the world, hedge funds are preparing for a host of debt restructurings in emerging economies,” a Financial Times article said. “Zambia’s struggle with its international creditors over debt payments is the latest sign of the stress to come. Last week, a group of 14 hedge fund and traditional bond investors indicated they would not support a proposal by the debt-laden country to suspend debt interest payments, unless it provided more clarity over its debts and came to the negotiating table.”

IEMG seeks to track the investment results of the MSCI Emerging Markets Investable Market Index. The index is designed to measure large-, mid- and small-cap equity market performance in the global emerging markets.

IEMG offers investors:

  1. Exposure to a broad range of emerging market companies
  2. Low cost, comprehensive access to stocks in emerging market countries
  3. Use at the core of a portfolio to diversify internationally and seek long-term growth

IEMG Chart

Another fund to look at is the iShares MSCI Emerging Markets ETF (NYSEArca: EEM). EEM seeks to track the investment results of the MSCI Emerging Markets Index.

The fund generally invests at least 90% of its assets in the securities of its underlying index and in depositary receipts representing securities in its underlying index. The index is designed to measure equity market performance in the global emerging markets. The underlying index will include large- and mid-capitalization companies and may change over time.

“Some managers have also spotted opportunities in EM equities. Interest in EMs, led by the Bric countries — Brazil, Russia, India and China — soared in the mid-noughties,” the WSJ article said further. “But as the US stock market’s decade-long rally took hold after the financial crisis, interest waned. Since the start of 2011, EM-focused hedge funds were hit by net outflows in seven out of nine years, according to data group eVestment. But this year, funds have received a net $3.4bn in flows, even as investors have pulled money out of hedge funds overall.”

“There is renewed interest in emerging markets, given that some more developed markets and economies are going to be struggling for a while” with the economic damage from Covid-19, said Sanjiv Bhatia, who manages Pembroke Emerging Markets hedge fund.

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