Emerging Markets ETF Cheat Sheet: Yields, Returns, Fees, And More

by: Michael Johnston

Emerging markets stocks are a core holding in the portfolios of many investors: Developing economies such as China and India account for a growing portion of global GDP, and a significant percentage of all global GDP growth. ETFs have become popular tools for tapping into this asset class; the low cost structures, intraday liquidity, and full transparency are appealing to those looking to beef up their exposure to emerging markets.

For investors seeking exposure to developing economies around the world, there are a number of ETFs that offer exposure to emerging markets stocks. The Emerging Markets Equities ETFdb Category consists of more than five dozen exchange-traded products, including both broad-based funds, regional ETFs, and several country-specific tickers as well.

Cheapest Emerging Markets ETF

Emerging Markets ETFdb Category
Number of ETFs 65
ER Range 0.20% to 0.99%
Total Assets $96.9 billion
(As of May 31, 2012)

There is a wide range of expenses in this ETFdb category; some funds charge as little as 20 basis points while others have expense ratios of close to 1% annually.

The cheapest emerging markets ETF is the Vanguard Emerging Markets ETF (NYSEARCA:VWO) at 0.20%, followed by the Schwab Emerging Markets ETF (NYSEARCA:SCHE) and iShares MSCI Emerging Markets Minimum Volatility Index Fund (NYSEARCA:EEMV) at 0.25%.

Commission-Free Emerging Markets ETFs

There are 13 ETFs in the Emerging Markets ETFdb category that are eligible for commission-free trading, including:

  • FTSE ASEAN 40 ETF (NYSEARCA:ASEA): 2 platforms
  • MSCI BRIC Index Fund (NYSEARCA:BKF): TD Ameritrade
  • MSCI Emerging Markets Currency-Hedged Equity Fund (NYSEARCA:DBEM): E*TRADE
  • Emerging Markets Equity Income Fund (NYSEARCA:DEM): E*TRADE
  • Emerging Market SmallCap Fund (NYSEARCA:DGS): E*TRADE
  • MSCI Emerging Markets Index Fund (NYSEARCA:EEM): Fidelity
  • India Earnings Fund (NYSEARCA:EPI): 2 platforms
  • SPDR S&P Emerging Markets Small Cap ETF (NYSEARCA:EWX): TD Ameritrade
  • Middle East Dividend ETF (NASDAQ:GULF): E*TRADE
  • SPDR S&P Emerging Europe ETF (NYSEARCA:GUR): TD Ameritrade
  • Market Vectors Russia ETF (NYSEARCA:RSX): TD Ameritrade
  • Emerging Markets Equity ETF: Charles Schwab
  • Emerging Markets ETF: 3 platforms

Most Heavily Traded Emerging Markets ETF

On an average day, the ETFs in the Emerging Markets ETFdb Category trade more than 90 million shares. The most heavily traded ETF in this category is the iShares MSCI Emerging Markets Index Fund, which has an average daily volume of about 54 million shares.

Best-Performing Emerging Markets ETF

The performance of emerging markets ETFs is all over the board, especially during the last year. As of May 31, 2012, the best performing Emerging Markets ETFs are as follows:

Best Performers
1 Year EPHE +18.04%
3 Years THD +124.89%
5 Years EWM +34.25%
(As of May 31, 2012)

Highest Yielding Emerging Markets ETF

Emerging markets ETFs aren’t generally known for high dividend payouts, but some products in this ETFdb category have meaningful dividend yields (as of May 31, 2012):

  • WisdomTree Middle East Dividend Fund: 6.29%
  • MSCI Poland Investable Market Index Fund (NYSEARCA:EPOL): 6.05%

Most Balanced Emerging Markets ETF

When comparing potential ETF investments, it is important to evaluate how deep and balanced the underlying portfolios are. Depth refers to how many individual securities comprise an ETF, while balance refers to how "top heavy" a product is -- what percentage of assets are concentrated in the 10 largest individual positions.

  • Deepest Emerging Markets ETF: The Vanguard MSCI Emerging Markets ETF has approximately 900 individual holdings. The MSCI Russia Capped Index Fund (NYSEARCA:ERUS) is the "shallowest" ETF, with fewer than 30 individual holdings.
  • Most Balanced Emerging Markets ETF: The iShares MSCI Small-Cap Emerging Markets ETF (NYSEARCA:EEMS) has just 3.9% of its holdings in the top 10 positions. At the other end of the spectrum, the MSCI Russia Capped Index Fund (ERUS) has almost 75% of assets in the top ten stocks.

Disclosure: No positions at time of writing.

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