This Fund is an Alternative Way to Invest in Emerging Markets

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

Investing in overseas markets is often seen as risky. This series on the top 20 largest exchange-traded funds (ETFs) already has covered one useful fund for diversifying with foreign markets, but today we’ll discuss an alternative you may find more appealing — the iShares MSCI Emerging Markets ETF (EEM).

EEM’s holdings are based on an index that follows not simply emerging market companies, but narrows that list to large- and mid-cap companies specifically. This focus means EEM doesn’t include as many potentially risky smaller companies as the Vanguard FTSE Emerging Markets ETF (VWO) does. EEM has more than 800 different positions in its portfolio and has an inclination towards long-term growth.

At a 6% loss for the year, EEM’s 2014 performance was not impressive, but that can be explained by the overall tone of overseas markets at the time. This year, the fund already has recovered much of that loss, rising 2.83%.

In terms of assets, EEM manages $32.7 billion. Plus, its 2.22% dividend yield offers additional appeal. With a 0.68% expense ratio, this isn’t the cheapest fund to own, but it is not a deal breaker either.

EEM_022015

This fund’s holdings are heavily weighted toward publicly traded companies in China. It also has large positions in South Korea and Taiwan, among others, and includes less-tapped markets such as Chile and the Philippines.

EEM’s sector weightings lean towards financial services, 28.34%; technology, 18.49%; and consumer discretionary, 9.04%. EEM invests 18.04% of its assets in its largest 10 positions. They include Samsung Electronics Ltd. (SSNLF), 3.50%; Taiwan Semiconductor Manufacturing Company (TSM), 2.94%; Tencent Holdings Ltd. (TCTZF), 2.18%; China Mobile Ltd. (CHLKF), 2.14%; and China Construction Bank Corporation (CICHF), 1.52%.

Emerging markets have had some major setbacks recently, but they seem to be improving this year compared to domestic markets. For those in need of a global fund that focuses on larger companies, iShares MSCI Emerging Markets ETF (EEM) could be a solid way to fill that niche.

Exclusive  Making Money Alert: Can the Global Divergence Last?

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

In case you missed it, I encourage you to read my e-letter column from last week about a Nasdaq-focused fund. I also invite you to comment in the space provided below.

previous article

Right now, there’s a $78 billion shortfall in the Highway Trust Fund that builds and repairs our vast Interstate Highway System. How are we going to pay for it?

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike Turner’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE