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]

Core Insights - Foreign equities investing has gained traction in 2025, with many investors shifting from underweight to neutral positions in ex-U.S. equities due to various market factors [1] - The Avantis Emerging Markets Equity ETF (AVEM) has seen significant inflows, totaling $5.2 billion year-to-date, positioning it among the top five emerging markets ETFs by assets under management (AUM) [2][3] Investment Strategy - AVEM combines indexing benefits such as diversification and transparency with active management strengths, allowing it to adapt to new market information [3] - The ETF focuses on small-cap firms with strong profits and low valuations while underweighting large-cap firms that exhibit lower profitability and higher price-to-book ratios [4] Performance Metrics - AVEM has delivered a year-to-date return of 31.9%, outperforming its category average, and has also returned 30% over the past year [5] - The ETF's strong performance is complemented by significant inflows, indicating investor confidence in its strategy [5] Market Outlook - The monetary situation in the U.S. compared to emerging markets is crucial, as many emerging economies have lower inflation and are ahead in their rate cycles, potentially making AVEM an attractive option heading into 2026 [6]

Group 1 - Emerging markets are experiencing significant growth, with the iShares MSCI Emerging Markets ETF (EEM) up 29% in 2025, including dividends, outperforming the S&P 500's 13% increase [1] - The weaker dollar is cited as a potential factor contributing to the strong performance of emerging markets [1] Group 2 - The article emphasizes the importance of analyzing macro drivers of various asset classes, including stocks, bonds, commodities, currencies, and crypto [1]

Group 1 - The iShares MSCI Emerging Markets ETF (EEM) has returned over 24% year-to-date, significantly outperforming the S&P 500 SPDR Trust ETF (SPY) which has a total return of 12.0% [1] - The average U.S. stock has only advanced by 8% in 2025, highlighting the strong performance of emerging markets compared to domestic equities [1]

Core Insights - Emerging markets have increased by over 20% year-to-date, marking the best start to a year since 2017 [1] - The iShares Core MSCI Emerging Markets ETF (IEMG) is outperforming the S&P 500 on a relative basis [1] Market Performance - The performance of emerging markets is highlighted as a significant trend, with a year-to-date increase exceeding 20% [1] - This performance is noted as the strongest since 2017, indicating a robust recovery or growth phase in these markets [1] Investment Implications - The relative outperformance of the IEMG ETF compared to the S&P 500 suggests potential investment opportunities in emerging markets [1]