Stock Selection Drives Q1 Performance | ETF Trends

By David Semple
Portfolio Manager, Emerging Markets Equity
Ola El-Shawarby, CFA
Deputy Portfolio Manager, Emerging Markets Equity

The Fund’s outperformance versus its benchmark in Q1 2024 was due, in large part, to stock selection in the Philippines and weightings in Kazakhstan and Georgia.

In the first quarter of 2024, emerging markets equities underperformed their developed markets counterparts. Overall, many of the trends and themes that played out during 2023 continued into the first quarter of 2024. The same countries that performed well last year (Taiwan Region & India) kicked off the year with a strong start. Taiwan Region’s strong performance was primarily due to its exposure to the A.I. mega-trend through its largest company, Taiwan Semiconductor Manufacturing Co. India continues to benefit from the macro tailwinds of a booming economy and impactful government policies. Brazil stands out in contrast as a large Q1 detractor following a strong 2023.

From a macro perspective, emerging markets investors remain laser-focused on the prospect of U.S. interest rate cuts this year. An accommodative Fed potentially bodes well for emerging markets equities, which would benefit from currency tailwinds if the dollar weakens. Unfortunately for EM investors, the dollar rallied for the majority of the first quarter as did long-term U.S. rates. Dollar strength undoubtedly contributed to emerging markets equity underperformance compared to their developed counterparts in Q1.


The VanEck Emerging Markets Fund (the “Fund”) outperformed the MSCI EM IMI on the quarter-to-date basis ending March 31, 2024 (+4.3% for the Fund; +2.2% for the Index). Positive relative performance was principally driven by stock selection in the Philippines and allocation (weighting) in Kazakhstan and Georgia.

After a positive, though somewhat muted 2023, the Philippines started the year off on the right foot as the top country contributor in the first quarter of 2024. The Fund’s Philippines’ stock selection effect boosted performance by 0.90%, with allocation also helping. The Philippines is the Fund’s second-largest country overweight to end the quarter (5.9% Fund weight; 0.7% Benchmark weight).

Brazil remains our largest country overweight (13.1% Fund weight; 5.2% Benchmark weight). After a stellar 2023, Brazil’s allocation effect was the single largest detractor to fund performance in Q1 2024; stock selection effect from Brazil was negligible. However, we continue to have high conviction in the solid investment case for Brazil going forward with further expected rate cuts, declining inflation, accelerating economic growth and attractive valuations.

Our exposure to China contributed negatively on an absolute basis for the quarter, but was slightly positive on a relative basis. We are encouraged by some recent data coming out of China pointing towards a stabilizing / improving economic environment including better than expected March 2024 Purchasing Managers’ Index (PMI) numbers and stronger travel and consumption trends during recent Chinese holiday seasons. We continue to focus on optimizing our stock selection in the country.

Average Annual Total Returns (%) as of March 31, 2024

1Q24 YTD 1YR 3YR 5YR 10YR
Class A: NAV (Inception 12/20/93) 4.26 4.26 13.12 -9.00 -0.15 1.24
Class A: Maximum 5.75% Load -1.74 -1.74 6.61 -10.78 -1.33 0.64
Class I: NAV (Inception 12/31/07) 4.40 4.40 13.81 -8.50 0.36 1.75
MSCI Emerging Markets Investable Markets Index (IMI) 2.17 2.17 9.76 -3.93 2.98 3.22
MSCI Emerging Markets Index 2.37 2.37 8.15 -5.05 2.22 2.95

The table presents past performance which is no guarantee of future results and which may be lower or higher than current performance. Returns reflect applicable fee waivers and/or expense reimbursements. Had the Fund incurred all expenses and fees, investment returns would have been reduced. Investment returns and Fund shares values will fluctuate so that investor’s shares, when redeemed, may be worth more or less than their original cost. Fund returns assume that dividends and capital gains distributions have been reinvested in the Fund at net asset value (NAV). Index returns assume that dividends of the Index constituents in the Index have been reinvested. Performance information current to the most recent month end is available by calling 800.826.2333 or by visiting

Expenses: Class A: Gross 1.54%; Net 1.54%; Class I: Gross 1.19%; Net 1.01%. Expenses are capped contractually until 5/1/24 at 1.60% for Class A and 1.00% for Class I. Caps exclude acquired fund fees and expenses, interest, trading, dividends, interest payments of securities sold short, taxes and extraordinary expenses.


 Quarterly returns are not annualized.

* All country and company weightings are as of March 31, 2024. Any mention of an individual security is not a recommendation to buy or to sell the security. Fund securities and holdings may vary.

All indices listed are unmanaged indices and include the reinvestment of all dividends, but do not reflect the payment of transaction costs, advisory fees or expenses that are associated with an investment in the Fund. Certain indices may take into account withholding taxes. An index’s performance is not illustrative of the Fund’s performance. Indices are not securities in which investments can be made.

The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of emerging markets countries. The MSCI Emerging Markets Investable Market Index (IMI) is a free float-adjusted market capitalization index that is designed to capture large-, mid-and small-cap representation across emerging markets countries.

MSCI Emerging Markets Investable Market Index (IMI) captures large, mid, small-cap cap representation across emerging markets (EM) countries. The index covers approximately 99% of the free float-adjusted market capitalization in each country.

This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.

You can lose money by investing in the Fund. Any investment in the Fund should be part of an overall investment program, not a complete program. The Fund is subject to risks which may include, but are not limited to, risks associated with active management, consumer discretionary sector, direct investments, emerging market issuers, ESG investing strategy, financials sector, foreign currency, foreign securities, industrials sector, information technology sector, market, operational, restricted securities, investing in other funds, small- and medium-capitalization companies, special purpose acquisition companies, special risk considerations of investing in Chinese, Indian, and Latin American issuers, and Stock Connect risks, all of which may adversely affect the Fund. Emerging market issuers and foreign securities may be subject to securities markets, political and economic, investment and repatriation restrictions, different rules and regulations, less publicly available financial information, foreign currency and exchange rates, operational and settlement, and corporate and securities laws risks. Small- and medium-capitalization companies may be subject to elevated risks. Investments in Chinese issuers may entail additional risks that include, among others, lack of liquidity and price volatility, currency devaluations and exchange rate fluctuations, intervention by the Chinese government, nationalization or expropriation, limitations on the use of brokers, and trade limitations.

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