Emerging Broad Markets

Why Invest in Emerging Markets

International markets can offer growth opportunities that may not be available in the United States due to differences in household income, younger populations, availability of natural resources, export strength, and movement toward free-market economic policies. Many Asian countries, for example, benefit from exports to the Chinese economy.

Exposure to these unique growth areas, as well as emerging markets, can boost return potential. Emerging market countries typically have lower household incomes and lower debt levels relative to developed markets, giving them the ability to grow faster.

Economic growth in the United States is expected to be subdued in the near term. The International Monetary Fund (IMF) is forecasting growth in the United States to be below world growth over the next several years.

Emerging-market economies in particular are expected to have high growth rates which the IMF estimates are two to three times faster than developed-market economies. Corporate revenues have the potential to grow faster when economic growth is higher. However, bottom-line profits depend on how expenses grow. For example, wages in China have continued to rise this year, despite the slowdown in revenue growth.

Key Indicators to consider before investing

  • GDP
  • Unemployment

Top 5 ETF’s by Market Capitalization

Name of the Fund Ticker Symbol /Total AUM* Year of Inception Expense Ratio
 Vanguard FTSE Emerging Market Stock Index VWO  03/04/2005 0.15%
 iShares  MSCI Emerging Markets Index  EEM  04/07/2003 0.72%
 iShares Core MSCI Emerging Markets IEMG  10/18/2010 0.14%
 Schwab Emerging Markets Equity SCHE  01/14/2010 0.13%
 WisdomTree Emerging Markets High Dividend DEM  07/13/2007 0.63%

 

 

 

 

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