Best Emerging Markets ETFs
Growth economies at valuations below developed markets
ETFs tracked
229
Avg TER
0.59%
Median CAGR 3Y
+16.1%
Emerging markets ETFs cover countries classified as emerging by index providers: China, India, Taiwan, Korea, Brazil, Saudi Arabia, South Africa, Mexico, and roughly 20 others. These economies are faster-growing in GDP terms than developed markets but come with higher volatility, currency risk, governance variability, and capital-flow sensitivity.
Country composition varies materially across funds. VWO has around 30% China exposure; IEMG sits around 27%; EEM around 26%. The differences come from index methodology — VWO excludes Korea (classified as developed by FTSE Russell) while IEMG and EEM include it (following MSCI). Taiwan typically carries 15–20% in any of them, with TSMC alone often the largest single holding. This matters: a portfolio "diversified across emerging markets" may be a concentrated bet on China and Taiwan tech.
Returns have been structurally disappointing over the past decade. From 2010–2024 the MSCI EM Index returned roughly 3–4% annualized in USD, well below the 13% on the S&P 500. Currency depreciation across emerging markets was a major drag. Starting valuations today (~12x forward P/E vs 20x for US) offer a more attractive entry, but the track record warns against naive extrapolation.
Beacon ranks emerging markets ETFs on cost, diversification, and composite quality score. Broad funds typically score higher than narrow single-country plays unless the investor has a specific view and can size the position accordingly.
Who this is for
- Globally diversified investors adding 5–15% in EM exposure
- Value-oriented allocators buying markets at cheaper multiples
- Not suitable for short horizons — EM drawdowns of 30–50% have occurred multiple times in the past 20 years
Top 10 ETFs
| # | Ticker | CAGR 3Y | Vol 1Y | Max DD | TER |
|---|---|---|---|---|---|
| 1 | +18.0% | 15.50% | -36.4% | 0.06% | |
| 2 | +18.5% | 15.50% | -36.1% | 0.07% | |
| 3 | +21.7% | 18.14% | -38.7% | 0.09% | |
| 4 | +18.2% | 15.86% | -36.2% | 0.07% | |
| 5 | +9.2% | 5.05% | -27.0% | 0.15% | |
| 6 | +26.2% | 19.81% | -42.8% | 0.25% | |
| 7 | +9.6% | 5.48% | -28.7% | 0.39% | |
| 8 | +21.9% | 18.78% | -41.1% | 0.25% | |
| 9 | +12.1% | 12.09% | -31.6% | 0.25% | |
| 10 | +8.6% | 15.33% | -41.9% | 0.19% |
Browse all 229 emerging markets ETFs
Filter, sort, and compare in the Beacon screener
Open screenerFrequently asked questions
- What counts as an emerging market?
- Index providers classify countries based on market access, settlement reliability, and economic development. MSCI and FTSE publish slightly different lists: MSCI classifies Korea as emerging, FTSE as developed. Common to both are China, Taiwan, India, Brazil, Mexico, South Africa, Saudi Arabia, Thailand, and most of Southeast Asia.
- Why do VWO and IEMG have different returns?
- VWO follows FTSE's methodology and excludes Korea (~12% weight in IEMG). That's the main source of divergence. Over 5-year windows returns have differed by 1–2% per year depending on whether Korean tech stocks (Samsung, SK Hynix) outperformed or lagged. Both funds are reasonable core EM holdings; the differences are structural, not quality-driven.
- How much of a portfolio should be in emerging markets?
- Market-cap-weighted indices allocate around 10–12% of global equity to EM. That's the default in global funds (VT, ACWI). Investors wanting a more explicit EM tilt may go to 15–20%. Going higher creates meaningful concentration in a small number of countries (China + Taiwan alone are often 45%+ of broad EM funds).
- Are emerging markets riskier than developed markets?
- Yes — higher volatility, higher drawdowns, more currency risk, more governance variability. The MSCI EM Index has experienced multiple peak-to-trough drawdowns exceeding 40% in the past 20 years (1997 Asian crisis, 2008, 2015, 2022). The trade-off is potentially higher long-run returns and lower correlation with developed markets, which adds portfolio diversification.
Related Region