Both the iShares Core MSCI EAFE ETF (IEFA 0.24%) and the iShares MSCI Emerging Markets ETF (EEM 0.23%) provide global equity exposure beyond the U.S., but their approaches diverge. IEFA covers developed markets outside the U.S. and Canada, while EEM focuses exclusively on emerging economies. Here's how they stack up on cost, returns, risk, and portfolio makeup.Snapshot (cost & size)MetricEEMIEFAIssuerISharesISharesExpense ratio0.72%0.07%1-yr return (as of Oct. 27, 2025)22.9%19.2%Dividend yield2.1%2.9%Beta1. ...

Market Status - FTSE Russell will upgrade Greek equities to developed-market status [1] - Greek equities spent a decade within the emerging asset class [1]

Core Viewpoint - Emerging markets (EM) outperformed developed markets (DM) in Q3, driven by strong gains in North Asian tech stocks and a rebound in Chinese market sentiment [1][2]. Group 1: Performance Overview - The MSCI Emerging Markets Index rose approximately 11% in Q3, compared to a 7% increase in developed markets [2]. - Key leaders included South Korea and Taiwan, benefiting from semiconductor and AI hardware demand, while ASEAN markets lagged due to weak domestic demand [3][5][8]. Group 2: Sector Performance - The rise was primarily driven by cyclical sectors such as consumer discretionary, technology, and materials [2]. - Notable sector performances included: - Consumer discretionary (+12.6%) - Technology (+10.4%) - Materials (+10.3%) - Communication services (+8.2%) - Defensive sectors like financials and healthcare underperformed, indicating a shift towards growth-sensitive sectors [11]. Group 3: Future Potential - Future performance of emerging markets will depend on several factors: 1. Earnings expectations: Bloomberg consensus predicts strong earnings growth for emerging markets, with +11.3% in 2025 and +15.0% in 2026, compared to lower expectations for the US and Europe [12]. 2. Valuation and capital flows: Emerging market stocks are trading at a lower valuation (expected P/E of 12.4) compared to developed markets, indicating potential for capital inflows [15]. 3. Dollar dynamics: A weaker dollar historically supports emerging market performance, while a strengthening dollar poses challenges [16]. 4. Domestic policies and reforms: Structural reforms in markets like India and Mexico can enhance mid-term earnings resilience [17]. 5. Commodity and trade conditions: Resource-rich regions benefit from rising metal and energy cycles, while Asian importers gain from lower energy prices [18]. 6. Industry leadership sustainability: The AI-related supply chain and consumer trends in emerging markets provide long-term growth drivers, though a shift to defensive sectors may alter leadership dynamics [18]. 7. Positioning and liquidity: Underweight positions suggest room for capital inflows, but smaller emerging markets may experience disproportionate volatility [18].

Global Economic Trends - The former first world is largely becoming the descending world [2] - Much of the former third world is now the ascending world [2] - Edelman's numbers correlate with GDP figures and visible improvements in countries like Saudi Arabia, Malaysia, India, and China [1] Data Reliability - There are potential concerns regarding the accuracy of Edelman's numbers for specific regions, such as Nigeria and Kenya [1]

Market Overview & Strategy - Market experienced a pullback, influenced by oil prices and existing high valuations, rather than the 10-year yield [1][2] - Wells Fargo Investment Institute suggests investors trim positions and take some profits off the table after a strong run since April lows, but not excessively [3][4] - The Institute advises buying on pullbacks, anticipating a potential 5-10% downside in the market [6][7] - Geopolitical tensions historically have short-lived market impacts, creating buying opportunities during sell-offs [12] Sector Preferences - The Institute favors energy, technology, communication services, financials, and utilities sectors [7] - Energy sector is favored, but the Institute is prepared to trim positions if oil prices surge excessively [11] International Markets - The Institute prefers developed markets over emerging markets due to concerns about China's real estate market [4][5] - US assets are favored due to the perceived higher quality and innovation of the US economy compared to the European economy [5][6] Oil Price Impact - Oil price at $75 per barrel is not expected to significantly harm global economies, but $120 oil would pose a risk, although not expected to be sustained [10] - Market's near-term performance is closely tied to oil prices [10]