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Have you looked at emerging markets exchange-traded funds lately?
While investors have been captivated by the continued dominance of the mega-cap growth driven U.S. stock market, five emerging markets countries have outperformed the S&P 500 index in the past month.
The top-performing country ETF, the iShares MSCI South Africa ETF (EZA) is up more than 10% while the largest country ETF, the iShares MSCI India ETF (INDA), has risen 5%, edging out the 4.6% gain for the SPDR S&P 500 ETF Trust (SPY).
Other countries outperforming U.S. stocks in the past month include Taiwan, South Korea and Indonesia.
Emerging markets ETFs, in aggregate, have nearly matched the one-month S&P 500 performance with a gain of 4.4%, as measured by the iShares MSCI Emerging Markets ETF (EEM).
The recent momentum for emerging markets comes at an interesting time for investors and advisors, as the S&P 500 is arguably overpriced at a price-earnings ratio of 29 (the historic median is about 17) while the PE on the MSCI Emerging Markets Index is 13.
With the prospects of a slowing U.S. economy and a weakening U.S. dollar in the second half of 2024, emerging markets are looking more attractive as a diversification tool.
Top Performing Emerging Markets Countries 2024
| Ticker | Fund | Expense Ratio | AUM | YTD Return |
| 0.59% | $244.7M | 33.51% | ||
| 0.49% | $123.2M | 24.93% | ||
| 0.59% | $5.5B | 21.86% | ||
| 0.79% | $981.8M | 19.64% | ||
| 0.59% | $301.0M | 12.57% |
Data as of July 9, 2024. Past performance is no guarantee of future results.
iShares MSCI Turkey ETF
The iShares MSCI Turkey ETF (TUR) tracks the MSCI Turkey IMI 25/50 Index, which includes both large and mid-sized companies across various sectors of the Turkish economy. Turkey's tech sector has been a standout performer this year, with strong growth from companies like the clothing retailer FLO and Pegasus Airlines.
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YTD return: 33.51%
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Assets under management: $244.7 million
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Expense ratio: 0.59%
iShares MSCI Peru ETF
The iShares MSCI Peru ETF (EPU) seeks to track the investment results of an index that provides exposure to Peruvian stocks, including companies with strong economic ties to Peru that are not listed on the Peruvian exchange. The EPU ETF is performing well in 2024 likely due to a surge in copper prices, a key Peruvian export that benefits many companies in the fund.
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YTD return: 24.93%
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Assets under management: $123.2 million
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Expense ratio: 0.59%
iShares MSCI Taiwan ETF
The iShares MSCI Taiwan ETF (EWT) seeks to track the MSCI Taiwan 25/50 Index, including large and mid-sized companies across various sectors of the Taiwanese economy. EWT’s outperformance in 2024 has been primarily driven by a rise in demand for semiconductors, a key industry within the Taiwanese economy.