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This article contains a list of the best-performing* emerging market funds, which come from countries that are developing. They present unique opportunities and risk compared to already developed nations. Learn which emerging market ETFs have performed the best in the UK and the US, and which emerging market countries have seen the biggest stock market returns.
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These are the best-performing* emerging country exchange-traded funds over the last five years as of January 2022 based on total cumulative return. Percentages represent total return over the last five years. Total return is the percentage profit on the original investment, if it was held for the last five years.
A country ETF invests in stocks from a specific country. Therefore, the ETF is a representation of how that country’s stock market has performed. These ETFs are listed on US exchanges, since there are very few emerging market country ETFs listed on the London Stock Exchange (LSE).
The data in this article is taken from justETF and ETFDB and is up to date as of January 2022.
| Country ETF | 5-Year Total Cumulative Return* | Expense Ratio |
|---|---|---|
| iShares MSCI Saudi Arabia ETF [KSA] | 102.46% | 0.74% |
| WisdomTree India Earnings Fund [EPI] | 102.33% | 0.84% |
| VanEck Russia ETF [RSX] | 102.03% | 0.61% |
| iShares MSCI China ETF [MCHI] | 62.39% | 0.59% |
| iShares MSCI South Korea ETF [EWY] | 64.21% | 0.59% |
| Global X MSCI Argentina ETF [ARGT] | 47.79% | 0.60% |
| Global X MSCI Greece ETF [GREK] | 35.29% | 0.58% |
| iShares MSCI Poland ETF [EPOL] | 38.02% | 0.59% |
| iShares MSCI Qatar ETF [QAT] | 38.02% | 0.59% |
| iShares MSCI Mexico ETF [EWW] | 21.62% | 0.51% |
| iShares MSCI South Africa ETF [EZA] | 19.18% | 0.59% |
| iShares MSCI Brazil ETF [EWZ] | 1.41% | 0.59% |
| VanEck Egypt Index ETF [EGPT] | 0.16% | 0.98% |
*Please note that past performance is not a reliable indicator of future results.
These ETFs may buy stocks from a variety of countries, although each may have its own investing strategy. For example, some may focus on buying stocks in a specific sector, such as technology stocks. Other funds may purchase only small-cap stocks from a wide array of emerging countries, while others may buy a variety of stocks from various emerging countries.
The best-performing* emerging market funds in the US over the last three years*, as of January 2022, include the following.
| ETF | 3-Year Total Cumulative Return* | Expense Ratio |
|---|---|---|
| Global X Emerging Markets Internet & Ecommerce ETF [EMQQ] | 77.13% | 0.86% |
| Invesco DWA Emerging Markets Momentum ETF [PIE] | 62.60% | 0.90% |
| iShares MSCI Emerging Markets Small-Cap ETF [EEMS] | 53.39% | 0.71% |
| SPDR S&P Emerging Markets Small-Cap ETF [EWX] | 51.58% | 0.65% |
| WisdomTree Emerging Markets ex-State-Owned Enterprises Fund [XSOE] | 51.18% | 0.32% |
*Please note that past performance is not a reliable indicator of future results.
The best-performing* global emerging market ETFs in the UK, over the last three years* as of January 2022, include the following list.
| ETF | 3-Year Total Cumulative Return* | Expense Ratio |
|---|---|---|
| HANetf EMQQ Emerging Markets Internet & Ecommerce UCITS ETF [EMQP] | 67.42% | 0.86% |
| iShares MSCI Emerging Small Cap UCITS ETF [IEMS] | 48.25% | 0.74% |
| SPDR MSCI Emerging Markets Small-Cap UCITS ETF [SPYX] | 47.52% | 0.55% |
| iShares MSCI EM SRI UCITS ETF [SUES] | 38.14% | 0.25% |
| iShares MSCI EM IMI ESG Screened UCITS ETF [Accumulating: SEGM, Distributing: GEDM] | 36.27% | 0.18% |
*Please note that past performance is not a reliable indicator of future results.
These ETFs purchase bonds from a variety of emerging countries. The ETF may have a specific focus, such as only buying high grade or government bonds, or it may buy a variety of bonds from a variety of countries.
Here are five of the top-performing emerging market bond ETFs in the US over the last three years, as of January 2022.
| ETF | 3-Year Total Cumulative Return* | Expense Ratio |
|---|---|---|
| WisdomTree Emerging Markets Corporate Bond Fund [EMCB] | 23.85% | 0.60% |
| JPMorgan USD Emerging Markets Sovereign Bond ETF [JPMB] | 22.61% | 0.39% |
| iShares JPMorgan EM Corporate Bond ETF [CEMB] | 21.36% | 0.50% |
| iShares JPMorgan USD Emerging Markets Bond ETF [EMB] | 20.48% | 0.39% |
| Vanguard Emerging Markets Government Bond ETF [VWOB] | 18.97% | 0.25% |
*Please note that past performance is not a reliable indicator of future results.
The top-performing* emerging market bond ETFs in the UK over the last three years, as of January 2022, include the following.
| ETF | 3-Year Total Cumulative Return* | Expense Ratio |
|---|---|---|
| Xtrackers ESG USD Emerging Markets Bond Quality Weighted UCITS ETF [XQUA] | 17.77% | 0.45% |
| iShares JP Morgan USD Emerging Markets Corporate Bond UCITS ETF [Distributing: EMCP, Accumulating: EMCA] | 17.04% | 0.50% |
| iShares J.P. Morgan USD Emerging Markets Bond UCITS ETF [EMHG] | 16.26% | 0.50% |
| iShares J.P. Morgan USD Emerging Markets Bond UCITS ETF [JPEE] | 15.99% | 0.45% |
*Please note that past performance is not a reliable indicator of future results.
Emerging markets provide diversification when included in an investment portfolio with domestic stocks. This is because emerging markets may not move the same as first-world markets such as the US or UK, for example.
In terms of performance, emerging markets have underperformed the SPDR S&P 500 ETF [SPY] over the last five years. Two of the largest funds, the Vanguard FTSE Emerging Markets ETF [VWO] and the iShares Core MSCI Emerging Markets ETF [IEMG] returned 63% and 67% over the last five years, while SPY returned 134%.
Since the end of 2013, these emerging market funds have returned around 52% and 49%, respectively, while the S&P 500 has returned 205%. All percentages include dividends.
The risk or volatility is roughly the same with these large emerging funds. They have a beta — a measure of volatility — of 0.96 and 1.01, respectively, while the S&P 500’s beta is 1.
Emerging markets funds are typically used as a passive investing strategy, although they could be actively traded as well.
Emerging market funds are subject to geopolitical risk and currency risk.
Geopolitical risk is when asset prices in a country are affected by things such as corruption, war, inequality, or an unstable political situation. Owning a basket of emerging markets has less geopolitical risk than picking stocks from only one emerging country. Any single country could experience an issue, while a basket is relatively stable; a basket (ETF) of emerging market stocks has roughly the same volatility as the S&P 500, as discussed above.
Currency is another risk. Owning shares in another country (even through an ETF) means that investor also own that country’s currency. If the currency rises, that helps boost returns or offset losses on the stock position. If the currency falls, that increases losses or reduces returns on the stock position. The Asian currency crisis of 1997 is a good example of currency risk. Several countries saw their currency values drop by more than 30%. This currency loss would be subtracted from any stocks gains.
FAQs
Specialised funds tend to be more volatile, but may also produce higher returns. The Global X Emerging Markets Internet & Ecommerce ETF [EMQQ] has been the best performing fund over the last five years, with a return of 113.75%.
You could open a self-directed trading account. This can be an ISA or normal trading account, for example. You will then need to do your research on which emerging market ETF you wish to choose and make sure you understand the risks associated with investing in emerging markets.
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