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Emerging Market ETF’s

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Question asked 21/06/2025

Emerging Market ETF’s

To the MM team, I would like your thoughts on Emerging Markets (EM's) and their role in a growth portfolio of ETF's. I do note that you don't hold any EM ETF's in your ETF Portfolio. Firstly, taking a medium term view what does MM think the risk return looks like for EM's vs say Europe or the US? Secondly, what ETF's would you consider buying in order to give good exposure to EM's? Lastly, which would you consider the better option an EM ETF or a more geographically focused ETF like INDA? Thanks for all the great content, Charles

Answer

Hi Charles,

We don’t currently hold a specific Emerging Markets ETF in our Core ETF Portfolio as the portfolio seeks a broader (all world) exposure to international equities (via VGS), rather than picking specific areas to target.

After a strong rally from its 2022 lows we feel the EM’s are pretty evenly balanced against both Europe and the US.
We like the iShares IEM ETF, its fees are relatively high at 0.7% but it provides excellent tracking to the MSCI Emerging Markets Index, not an easy beast to follow – over the last 3-years its tracked the index within 0.24%. From a country perspective its largest 5 current exposures are 28% China, 18% India, 18% Taiwan, 9% South Korea and 4% Brazil.
At times we would definitely be comfortable being more focused such as towards India via the INDA ETF.
At this stage we like both the INDA and IZZ ETF for direct China exposure.

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iShares Emerging Markets ETF (IEM)

LAST UPDATED 19/06/2025 13:47

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