Level Up Your Portfolio With These Emerging Market ETFs

Core Insights - Emerging markets showed strong performance in 2025, with stocks rising approximately 26% despite geopolitical and tariff uncertainties [1] - Investor sentiment towards emerging markets has significantly improved, with net sentiment reaching a record high according to an HSBC survey [2] Market Performance - The Dow Jones Emerging Markets Index has increased by 18.64% year to date, outperforming the S&P 500 Index, which has gained 15.19% during the same period [3] - Emerging market equity funds experienced inflows of $2.78 billion in the week ending December 10, marking the seventh consecutive week of net buying [7] Investment Trends - Investors are diversifying away from U.S. equity trades, particularly in light of concerns over a potential AI-driven bubble, leading to increased interest in emerging market funds [4][6] - The weakening U.S. dollar and expectations of further Federal Reserve rate cuts are enhancing the attractiveness of emerging market funds [8][9] Fund Recommendations - Suggested emerging market equity ETFs include iShares Core MSCI Emerging Markets ETF (IEMG), Vanguard FTSE Emerging Markets ETF (VWO), and iShares MSCI Emerging Markets ETF (EEM) [11] - For emerging market bonds, recommended ETFs include iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) and Vanguard Emerging Markets Government Bond ETF (VWOB) [14] Economic Fundamentals - Emerging market fundamentals are strengthening, with improvements in sovereign credit gaining momentum year after year, as noted by a strategist at Morgan Stanley [13]