The financial market is an exciting and inviting place where many emerging market ETFs can provide substantial profits when traded right.
An Exchange Traded Fund or ETF is a securities group that can include stocks, commodities, or bonds. These are traded like stocks on an exchange. The number of holdings and sectors of each ETF may vary, which creates a unique opportunity for each trader. Moreover, ETFs can be purchased on margin. Which means that you can also use risk management as a technique to optimize your gains and decrease losses.
This article has showcased a list of the best emerging market ETFs and their positive aspects. Shall we begin?
What is an emerging market ETF?
As the name might imply, an emerging market ETF is an Exchange Traded Fund made of assets originating in emerging market economies. Some of the included countries are located in Latin America, Eastern Europe, and Asia.
According to reports, the advantage of emerging market ETFs is that they "can bring diversity to an investment portfolio as they are less correlated to U.S. equities." When the U.S. dollar is low, emerging markets gain rise. It also helps emerging market economies pay off any debt in the U.S. currency.
Invest in emerging market ETFs in 3 steps
Open a trading account
If you have found your ideal broker to trade emerging ETFs with, your first step is to sign up. They will ask for personal information such as name, email, phone number, and password to get started. You will then have to check your email for a verification code and click on it to activate your new trading account.
Choose emerging ETFs.
With your new activated account, you will be ready to make a deposit. Check the deposit methods to see what is available: credit card, debit card, bank wire transfer, epayments. Also, see if there is a minimum amount. Once your account balance has changed from 0, you are ready to trade.
Place your trade
After your account was funded, it’s time to look for the trading button, which should take you to the available emerging market ETFs. The broker will probably offer you trading ideas, but it is always good to know how many shares you want to start trading.
Where can I trade emerging market ETFs?
You can start trading emerging market ETFs with a broker. A broker will act as an intermediary and help you place any trades a financial exchange is offering.
There are a few essential aspects to consider when choosing your broker to trade ETFs based on developing economies. It is a good idea to look at customer support, languages, educational material, and access to webinars or seminars.
In the table below, we have shortlisted our top three brokers. We believe that these are the best brokers in 2021 based on their regulations, commissions, and fees.
Best emerging market ETFs to buy now
There are many best emerging market ETFs to trade which you can choose from. The opportunities will depend on your needs and the ETFs investment portfolio. Below we have listed the best emerging ETFs to buy in 2021 because of their increased liquidity and exceptional performance throughout the years.
- IEMG - iShares Core MSCI Emerging Markets ETF
- SCHE - Schwab Emerging Markets Equity ETF
- EEM - iShares MSCI Emerging Markets ETF
- GEM - Goldman Sachs ActiveBeta Emerging Markets Equity ETF
- CHIH - Global X MSCI China Health Care
- FNI - First Trust Chindia
- SPDR - Portfolio Emerging Markets ETF
- VictoryShares USAA MSCI EM Vl Mntm ETF
- JPMorgan Diversified Return EMkts Eq ETF
- EMQQ - Emerging Markets Internet & Ecommerce ETF
IEMG - iShares Core MSCI Emerging Markets ETF
Launched in 2012, IEMG has a one-year daily return of 23.20%. Some of the emerging markets that are part of the ETF are Hong Kong, Korea, Taiwan, China, India, Brazil, and others. It has a total of 2,498 holdings and $73.73 billion worth of assets under management.
SCHE - Schwab Emerging Markets Equity ETF
Schwab Emerging Markets Equity has been around since 2010. Its average daily return is 20.46%, and its market cap is $160.19 billion. It has 1,505 holdings, with the top sectors being technology, financial, and consumer cyclical.
EEM - iShares MSCI Emerging Markets ETF
Since 2003, EEM has tracked an index of emerging markets according to the market cap. It is one of the first to provide this sort of equity. EEM has an average daily trading volume of $2.12 billion. Its top two specializations are technology and financials.
GEM - Goldman Sachs ActiveBeta Emerging Markets Equity ETF
Since 2015 GEM has been compromised by four sub-indexes: value, momentum, quality, and low volatility. It has 413 holdings and $1.92 billion worth of assets under management. Some of the emerging countries that are part of GEM are Hong Kong, Mexico, and Korea.
CHIH - Global X MSCI China Health Care
CHIH is only made up of three countries: Hong Kong (73.33%), China (24.95%), and the United Kingdom (1.72%). It has 89 holdings, and its average daily trading volume is $266,810. CHIH has an annual total return of 52.76%.
FNI - First Trust Chindia
First Trust Chindia was founded in 2007 and now has 49 holdings. Some of the emerging countries that are part of the ETFs are India, China, Hong Kong, and others. This ETF has a one year daily total return of 58.96%. Also, it has $88.20 billion worth of weighted market cap.
SPDR - Portfolio Emerging Markets ETF
This emerging ETF has 2,583 holdings with technology being the most influential sector with a solid presence of 30.88%. Since its foundation in 2007, SPDR now has $5.63 billion worth of assets under management and a one year daily total return of 20.43%.
VictoryShares USAA MSCI EM Vl Mntm ETF
Victory Shares ETF was launched in 2017 and had a 12-month yield of 2.17%. Its daily average trading volume is $125,300, while its total assets are worth around $287.8 million.
JPMorgan Diversified Return EMkts Eq ETF
With an inception date in 2015, it has market price returns of around 0.95%. It has 244,549 total assets and an approximate year return of 6.65%. Its expense ratio is currently at 0.44%.
EMQQ - Emerging Markets Internet & Ecommerce ETF
EMQQ has an attractive one-year daily return of 90.01%. The ETF comprises 97 holdings where 70.30% is dedicated to internet services, followed by department stores (8.42%). Its average market cap is $163.50 billion.
Expert tip on investing in emerging market ETFs
If you want to start trading emerging market ETFs, it is always a good idea to learn. You must know how the market moves, what ETFs suit you better, and which broker can help you. A good broker should be regulated and offer you risk management along with leverage. You must have convenient customer support in a language you can understand since trading is sometimes risky and fast.
Why trade ETFs?
As a trader, you might like what ETFs have to offer. Their price is updated during the day, and you can trade them like stocks during market hours. You can also use risk management techniques when buying or selling ETFs. Also, ETFs are becoming increasingly popular because of their low commissions.
Emerging market ETFs could be a good idea. According to reports, "an emerging market economy is one that is currently developing from a closed economy to one that is a market economy," which could create excellent opportunities.
Frequently Asked Questions
The number one emerging market ETF will depend on your research and what fits your goals. ETFs are popular because they are less risky and don’t require you owning the underlying asset.
Emerging market ETFs work with specific countries and industries. ETFs can always be a good investment if you know what you are doing.
Traders that already have a broker can invest in emerging market ETFs.
A share is a unit of stock, while an ETF is a basket of equities. These equities can be shares, commodities, or bonds.
They are also suitable for beginners who are willing to learn and trade keeping their emotions away.
The size of the emerging market ETFs will depend on the ETF. You can look at their performance and historical data to learn more about them.