IEMG: Implied Returns Are 10% But Chinese Recessionary Risks Remain

Summary

• IEMG is priced for returns of circa 10%.
• Even if earnings growth rates disappoint, downside is probably limited.
• However, as China is probably in a contractionary phase in the short-to-medium term (economically), IEMG is not well positioned cyclically, with its large exposure to China.
• Therefore, while implied returns are decent, I would remain neutral on IEMG in the medium term.
• That is especially given that even strong fund inflows recently have been unable to support IEMG's share price.

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Introduction to IEMG

iShares Core MSCI Emerging Markets ETF (NYSEARCA:IEMG) is an exchange-traded fund offering investors exposure to "a broad range of emerging market companies". The fund's inception date was October 18, 2021.

IEMG invests

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.