Ex-U.S. equities have performed well for investors this year. Many investors and advisors entered 2025 looking to move from underweight to neutral or even overweight foreign equities positions. The decline of the dollar and certain market events, also, contributed to strong performance for those foreign equities relative to U.S. investments. Those segments continue to appeal even as the year draws to a close. Investors can get a better sense of the potential of one subcategory, emerging markets equities, through three notable stocks.
See more: This Overlooked Market Segment Can Surprise Investors in 2026
Why emerging markets? While a case can be made for developed market ex-U.S. stocks, emerging markets are further ahead in their rate cycles and may offer more growth — with the right ETF approach. Which stocks, then, deserve a look therein and have contributed significantly to EM equities performance?
Emerging Markets ETFs & EM Equities to Watch
Let’s explore a few of the top holdings in the Fidelity Emerging Markets Multifactor ETF (FDEM).
Taiwan Semiconductor Manufacturing Co. (TSM) has been in strong form so far this year, returning 46.4% YTD. The standout global semiconductor firm is up more than 180% over the last five years and remains an important part of the global tech landscape — and in FDEM, as the ETF’s largest holding as of writing.
The ETF also invests in Tencent Holdings (TCEHY), another East Asian standout, which has returned 48.1% YTD, itself. TCEHY’s massive scope includes a variety of multimedia offerings from video games to social media to e-commerce.
Finally, Fidelity Emerging Markets Multifactor ETF’s (FDEM) investment in Alibaba Group (BABA) also merits attention. The third-largest stock in the ETF’s holdings by weight as of writing, the major Chinese firm has returned a whopping 86.1% YTD. It has done so despite continued uncertainty about Chinese stocks, but perhaps benefitting from a move away from U.S. stocks.
Emerging markets ETFs can provide exposure to those firms and others that are outperforming. An ETF like the Fidelity Emerging Markets Multifactor ETF (FDEM) can provide exposure therein. Charging 27 basis points, FDEM has returned 25.4% YTD per ETF Database data as of November 6. The strategy invests in SK Hynix, for example, with its multifactor approach looking for stocks with attractive valuations, positive momentum, and high quality profiles, while making slight tilts to sectors that are less correlated to U.S. stocks. Together, funds like FDEM could intrigue as foreign stocks in EM continue to perform.
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Fidelity Investments® is an independent company unaffiliated with VettaFi LLC (“VettaFi”). These articles do not form any kind of legal partnership, agency affiliation, or similar relationship between VettaFi and Fidelity Investments, nor is such a relationship created or implied by the articles herein. VettaFi LLC is the author and owner of these articles.
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