Huge Emerging Markets Fund Offers Diversification

Doug Fabian

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

Our coverage of broad-based emerging markets exchange-traded funds (ETFs) today will feature another huge U.S.-based emerging markets fund, iShares MSCI Emerging Markets Index (NYSE: EEM), with a whopping $30.6 billion in net assets.

A “broad-based” emerging markets ETF is one with investments not concentrated in a specific region. The fund seeks to track the investment of the MSCI Emerging Markets Index, which is composed of large- and mid-capitalization emerging market equities.

With money in more than 800 emerging-markets stocks, it is an understatement to say EEM’s portfolio is well diversified. The holding with the highest weight in the portfolio only makes up 3.77% of the fund’s investments, and all except nine holdings in the portfolio have weightings of less than 1%. This means is that two or three underperformers likely will have scant impact on the fund’s overall performance.

EEM has had a terrific year in 2016, with a total cash inflow of more than $6.7 billion, a number exceeded by only four other ETFs in the world. Its year-to-date return is 13.17%, beating the S&P 500’s 4.66% return by a large margin. The graph below indicates a clear rise in the price of the fund in 2016, starting at $28 at the beginning of the year to its current price of around $37, a tremendous increase of 32%.


View the current price, volume, performance and top 10 holdings of EEM at

The fund has a dividend yield of 1.67% and an expense ratio of 0.69%. EEM’s top five holdings are Tencent Holdings Ltd, 3.77%; Samsung Electronics Co Ltd, 3.40%; Taiwan Semiconductor Manufacturing Co Ltd, 3.39%; Alibaba Group Holding Ltd ADR, 2.80%; and China Mobile Ltd, 1.89%. EEM typically holds onto most of its investments for the long term.

If you are interested in gaining exposure to large and mid-sized companies in emerging markets and simple access to over 800 emerging market stocks, consider iShares MSCI Emerging Markets Index (EEM).

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As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

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