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Asset Class: Diversified Emerging Markets
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Correlation to U.S. Stock Market: 0.75
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Long-Term Performance: 5.45% CAGR
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S&P 500 Performance: 10.55% CAGR
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Back test timeframe: January 1995 – February 2024
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Oldest ETF back tested: iShares MSCI Emerging Markets ETF (EEM)
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Correlation to U.S. Stock Market: 0.76
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Long-Term Performance: 8.08% CAGR
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S&P 500 Performance: 10.63% CAGR
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Back test timeframe: May 2003 – February 2024
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Number of ETFs available in this asset class: 98
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Number of ETFs in this asset class that are 10-years old or older: 27
Diversified Emerging Markets vs S&P 500: January 1995 – February 2024
EEM vs SPY: May 2003 – February 2024
EEM vs SPY: April 11, 2003 – March 1, 2024
The Deep Value ETF Accumulator rankings for the 27 oldest Diversified Emerging Markets ETFs:
The 5 top ranked Diversified Emerging Markets ETFs head-to-head comparisons:
FEMS vs DGS vs EWX vs EEMS vs SPEM: March 2012 – February 2024
FEMS vs DGS vs EWX vs EEMS vs SPEM: February 17, 2012 – March 1, 2024
Stated objectives of 5 top ranked Diversified Emerging Markets ETFs:
FEMS – The First Trust Emerging Markets Small Cap AlphaDEX® Fund is an exchange-traded fund. The investment objective of the Fund is to seek investment results that correspond generally to the price and yield, before the Fund’s fees and expenses, of an equity index called the Nasdaq AlphaDEX® Emerging Markets Small Cap Index. Index Description According to the Index Provider. The Index is an “enhanced” index created and administered by Nasdaq, Inc. (“Nasdaq”) which employs the AlphaDEX® stock selection methodology to select stocks from the Nasdaq Emerging Markets Index that meet certain criteria. To construct the Index, Nasdaq ranks the eligible stocks on growth factors including 3-, 6- and 12- month price appreciation, sales to price and one year sales growth, and separately on value factors including book value to price, cash flow to price and return on assets. All stocks are ranked on the sum of ranks for the growth factors and, separately, all stocks are ranked on the sum of ranks for the value factors. A stock must have data for all growth and/or value factors to receive a rank for that style. Each stock receives the best style rank from the previous step as its selection score. The top 200 stocks based on the selection score determined in the previous step comprise the “selected stocks”. The selected stocks are divided into quintiles based on their rankings and the top ranked quintiles receive a higher weight within the index. The stocks are equally weighted within each quintile. Each stock is then tested in order of its selection score rank to check if the weight assigned to that stock is outside the country/sector weighting constraints, which are set at 15% above the benchmark weight. If the weight assigned to the stock, when added with the weight assigned to all higher ranking stocks in its country/sector, is greater than the constraint, then the stock’s weight is lowered to the highest rank in the next quintile. Stocks previously lower in rank then move up one rank. Such stocks in the lowest quintile that violate a constraint are removed from the portfolio and replaced by the highest scoring stock not originally selected, subject to country/sector constraints. This process continues until all the country/sector weightings meet the constraint. The Index is reconstituted and rebalanced semi-annually.
DGS – WisdomTree Emerging Markets SmallCap Dividend Fund seeks to track the investment results of dividend-paying small-cap companies in the emerging markets region. Gain exposure to small cap equity of emerging market dividend paying companies. Use to complement emerging market exposure accessing local economic growth and to satisfy demand for growth potential and income focus.
EWX – The SPDR® S&P® Emerging Markets Small Cap ETF seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P® Emerging Markets Under USD2 Billion Index (the “Index”). Seeks to provide exposure to the small capitalization segment of emerging countries included in the S&P Global Broad Market Index. The selection universe includes emerging country equites within the S&P Global BMI with market capitalizations between $100 million and $2 billion at the time of inclusion.
EEMS – The iShares MSCI Emerging Markets Small-Cap ETF seeks to track the investment results of an index composed of small-capitalization emerging market equities. Exposure to small public companies in emerging market countries. Targeted access to a specific subset of emerging market stocks. Use to customize an emerging markets stock allocation by expressing a view on small-cap stocks.
SPEM – The SPDR® Portfolio Emerging Markets ETF seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P® Emerging BMI Index (the “Index”). One of the low cost core SPDR Portfolio ETFs, a suite of portfolio building blocks designed to provide broad, diversified exposure to core asset classes. A low cost ETF that seeks to offer broad exposure to emerging market equities. Could potentially mitigate country-specific risk.
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Respectfully yours, Micah McDonald, aka the Deep Value ETF Accumulator
Previous Deep Value ETF Accumulator articles on Diversified Emerging Markets ETFs:
FEMS vs DGS vs EWX vs EEMS vs SPEM – 5 Best Diversified Emerging Markets ETFs to Own Long-Term 1.6
Disclosure: We currently own shares of FEMS & SPEM and we intend to buy more shares in the future. I am not a professional investment advisor. Please perform your own due diligence or seek the advice of a Registered Investment Advisor before investing in any security mentioned in this article. This website contains affiliate links to Google AdSense.