Best Emerging Markets ETFs Right Now

Emerging market exchange-traded funds (ETF) bundle assets from areas in economic transition. An emerging market ETF focuses on the stock of countries and regions undergoing economic transition. (Think Latin America or Asia.) These economies have high growth rates and a surplus of natural resources heavily consumed by developed economies like the U.S.

Check out Benzinga’s guide to the top emerging marketing ETFs right now.

Emerging Market ETFs Biggest Gainers and Losers

The top emerging market ETF gainers often continue to reach new heights when fundamentals are strong. But it’s crucial you’re cautious because a retracement could follow growth. 

Use these daily lists to stay informed of the biggest percentage gainers and losers in real-time.

Premarket Emerging Market ETFs

Premarket trading takes place from 4 a.m. to 9:30 a.m. EST. The premarket session allows you to enter a trade before the masses come in to push the prices up or down. You can react immediately to news items, such as a company’s quarterly earnings. Premarket trading may result in lower prices and less liquidity. Less trading activity causes wider spreads between the ask and buy prices. It may be difficult to get the price you want or have an order executed.

Aftermarket Emerging Market ETFs

It’s possible to trade ETFs after the close of normal trading hours. The aftermarket session allows you to take advantage of events that happen in foreign markets, which could influence prices on the U.S. markets. Trade volumes are typically lower than regular and premarket trading sessions. You may experience greater price changes than normal trading hours.

Why Invest in Emerging Market ETFs?

Here are the biggest benefits of investing in emerging market ETFs:

• Diversification: Many equity investment opportunities are available offshore where the sectors are broader and economies are undergoing rapid development. Exposure to emerging economies may allow for portfolio diversification and access to sectors underrepresented in the local market.
• Exposure to the economic cycle: Developed economies usually experience synchronized growth. Emerging markets are often more diverse and can provide exposure to various stages of economic transition. This growth divergence helps create distinct investment opportunities.
• Valuation: Companies in developed economies already have valuation factored into stock prices, while those in emerging markets often don’t. This creates a potential to identify stocks trading at lower valuations relative to their overall growth outlook.

3 Emerging Market ETFs by AUM

Here are some of the top emerging market ETFs organized by total assets under management (AUM).

1. Vanguard FTSE Emerging Markets ETF (NYSEARCA: VWO)

The Vanguard FTSE Emerging Markets ETF allows you to invest in stocks of companies located in emerging markets like China, Taiwan, Brazil and South Africa. It closely tracks the returns of the FTSE Emerging Markets weighted index and includes approximately 3,550 stocks of small-, mid- and large-cap companies. 

This ETF has $69.2 billion assets under management, a 0.10% expense ratio and offers exposure to 5,066 emerging market stocks. Foreign holdings account for 98.8% of the fund. Some of the largest are Alibaba Group Holding Ltd. (NYSE: BABA), Tencent Holdings Ltd. (HKEX: 700) and Taiwan Semiconductor Manufacturing Co. Ltd (TPE: 2330). Its 10 largest holdings make up 25.80% of its total net assets. 

China represents 43.9% market allocation and Taiwan comes in 2^nd with 15.4%. Each of the remaining emerging markets account for less than 10% of the total market share.

2. iShares Core MSCI Emerging Markets ETF (NYSEARCA: IEMG)

The iShares Core MSCI Emerging Markets ETF provides exposure to a broad range of emerging market companies. Based in Ireland, EIMI has a total expense ratio of 0.13%. The fund had slightly over 1 billion shares outstanding, a total of 2,474 holdings and $44.8 billion assets under management (AUM) as of April 21, 2020.

EIMI’s top 10 holdings make up 25.56% of the total share. These include Tencent Holdings Ltd. (HKEX: 700), Samsung Electronics Ltd. (KRX: 005930) and China Mobile Ltd. (HKEX: 941). Daily trade volume averages 14 million shares.

3. Schwab Emerging Markets Equity ETF (NYSEARCA: SCHE)

The Schwab Emerging Markets Equity ETF is a straightforward, low-cost fund that tracks the total return of the FTSE Emerging Index. The fund invests in more than 20 emerging market economies. This Schwab fund had 16.57% return on equity and a 5-year earnings growth of 15.24%. It owns assets worth slightly over $5.3 billion and has an expense ratio of 0.11%.

China accounts for 44.60% of the total portfolio, while Taiwan comes 2^nd at 13.84%. Other emerging markets include Russia, Thailand, Saudi Arabia, Brazil and India. The fund has 1,435 holdings and a market capitalization of $112.86 billion. More than 600,000 shares are traded daily.

Naspers Ltd Class N (JSE: NPN), Alibaba Group Holding Ltd. (NYSE: BABA) and Taiwan Semiconductor Manufacturing Co. Ltd. (TPE: 2330) are among the top holdings. Financials take the largest percentage — consumer discretionary and communication services complete the top 3 sectors.

Best Online Brokers for Emerging Market ETFs

Sign up for a brokerage account to invest in emerging market ETFs. Here are our favorite online brokers to trade the top ETFs.

1. TradeStation

TradeStation doesn’t just offer commission-free trades and a $0 account minimum. It also gives you access to more than 2,000 ETFs that track currencies, commodities, sectors and indices. TradeStation’s simulated trading account lets you backtest strategies in real time and access one of the industry’s largest historical market databases.

Its fully customizable charting, analysis and market monitoring tools help you identify and act immediately on trading opportunities. The unique TradingApp® Store offers hundreds of custom TradeStation software products — strategies, indicators and other apps — to amplify the power of the platform.

TradeStation also offers integrated, direct-access order execution using its intelligent order-routing algorithm. You can route orders to multiple market centers, and the brokerage connects directly. You’ll also enjoy personalized support from licensed brokerage professionals.

2. Firstrade

Firstrade offers a complete suite of investment products and discount brokerage services through its simple, streamlined platform. You can perform commission-free trades on any of its 2,200+ ETF products with a $0 minimum initial deposit. Through the Securities Investor Protection Corporation (SIPC), Firstrade insures up to $500,000 for securities including $250,000 for claims for cash.  

The brokerage also allows for extended hours trading and representatives are ready to assist if you’re unable to place an order. Customer service is exceptional and available through phone, chat, email, Twitter and Facebook.

Educational resources, research and tools are also abundant. Investment screeners, stock reports from Morningstar and Benzinga analysts, alerts and a real-time streaming watchlist can help you get the latest on market conditions. Traders outside the U.S. can open an international account and enjoy free, unlimited fund transfers using ACH.

3. TD Ameritrade

TD Ameritrade is known best for its thinkorswim platform. You’ll get access to elite-level trading tools backed by education, insights and a dedicated trade desk for a fully-customizable experience. Also incorporated is an Economic Data Tool that lets you tap into 400,000+ economic data points spanning 6 continents, as well as key economic indicators and chart data points to measure market performance. 

You can also practice trading with a paperMoney account funded with $100,000 of virtual money. The ETF Market Center provides personalized screeners, commentary, research tools and technical analysis to help you choose ETFs best suited for your portfolio.

Enhance your trading knowledge with its collection of webcasts and articles, a library of how-to-videos and an immersive curriculum. Check out live market education and coverage from the TD Ameritrade Network media affiliate.

Open an account with a $0 minimum balance and enjoy cost-free trades. You’ll need a $2,000 deposit to be considered for margin and some options privileges.

Betting On Emerging Market ETFs

Include emerging markets as part of your portfolio to gain exposure to the world’s economic growth. Volatility should be handled as an opportunity for major entry points and portfolio rebalancing.

As with investing in penny stocks, it is important to assess how an emerging market fund suits your overall strategy. Stay up to date with market movements and consider each fund’s objectives, charges, risks and expenses.