What to Consider Before Adding This Emerging Markets ETF to Your Portfolio

Group 1 - The MSCI Emerging Markets Index has outperformed the S&P 500 for only the second time since 2019, with the last occurrence in 2022 being a year of recession for both indices [1] - In 2025, investors are showing renewed interest in emerging market stocks, evidenced by $6.88 billion in inflows to the Vanguard FTSE Emerging Markets ETF, the second-largest ETF in its category [2] - The Vanguard ETF has been less volatile than basic S&P 500 index funds over the past three years, despite emerging markets being generally viewed as more volatile [3] Group 2 - The Vanguard FTSE Emerging Markets ETF follows the FTSE Emerging Markets All Cap China A Inclusion Index, differing from competitors that track the MSCI Emerging Markets Index [4] - South Korea is classified as a developed market by FTSE Russell, leading to its exclusion from the Vanguard fund, which has been beneficial for investors over the past decade [5] - The Vanguard ETF has a significant tilt towards China, Taiwan, and India, which together account for 74.5% of its geographic exposure, compared to approximately 64% in MSCI-based ETFs [6] Group 3 - Emerging markets stocks have seen a resurgence in 2025, making the Vanguard ETF a prominent option for investors seeking exposure to developing economies [7] - The ETF's holdings are heavily weighted towards the technology and consumer discretionary sectors, with nearly 36% of its 6,146 holdings in these areas, indicating a shift away from commodities dependence [8]