Best Emerging Markets ETFs to Buy in Singapore

The FTSE Emerging Index returned 31.09% in US-dollar terms over the twelve months to 30 April 2026, broadly matching the FTSE All-World Index, which returned 30.87% over the same period.

That performance, however, came from a highly concentrated portfolio. China accounted for 29.4% of FTSE Emerging as of 30 April 2026, followed by Taiwan at 29.0% and India at 16.0%. 

Together, these three markets represented almost three-quarters of the index. TSMC alone made up 15.9%, while technology stocks accounted for 32.5%, reflecting the growing influence of semiconductors and AI infrastructure on emerging-market returns.

The index also leaves out one of Asia’s largest semiconductor markets. FTSE Russell classifies South Korea as a developed market, so companies such as Samsung Electronics and SK Hynix are not included in FTSE Emerging. They remain part of MSCI Emerging Markets, making the choice between an FTSE- and MSCI-tracking ETF a meaningful portfolio decision rather than a minor difference in branding.

Emerging-market returns are also shaped by very different economic drivers. Taiwan provides concentrated semiconductor exposure, China contributes internet platforms, financials and consumer companies, India adds domestic growth and financial-sector exposure, while Brazil and Saudi Arabia bring greater sensitivity to commodities and energy. Currency movements can further affect the returns received by investors measuring their portfolios in SGD.

Choosing an emerging-markets ETF therefore involves more than comparing recent performance or expense ratios. The key decisions include:

• Standard large- and mid-cap versus broader all-cap exposure

• FTSE versus MSCI country classification, particularly whether South Korea is included

• Broad emerging markets versus ex-China strategies

• Market-cap weighted versus factor, dividend or actively managed strategies

• Equity versus sovereign or corporate bond exposure

• SGX-listed, US-domiciled and Ireland-domiciled UCITS ETFs

• Accumulating versus distributing share classes

What is an emerging markets ETF?

An emerging-markets ETF invests in shares or bonds from economies classified as emerging by an index provider such as MSCI, FTSE Russell or S&P Dow Jones Indices.

The underlying index determines the fund’s actual exposure, including:

• Which countries are classified as emerging
• Whether South Korea is included, as MSCI classifies it as emerging while FTSE Russell classifies it as developed
• Whether the fund holds only large- and mid-cap companies or also includes small caps
• How China A-shares are represented
• Whether securities are weighted by market capitalisation, dividends, investment factors or sustainability criteria
• Whether the fund invests in equities, government bonds or corporate debt

The ETF name alone does not fully describe what it holds. Two funds labelled as emerging-markets ETFs can have materially different country weights, company holdings and risk profiles depending on the index or strategy they follow.

These differences have led to a wide range of emerging-markets ETFs, from broad equity funds designed for a core allocation to more targeted ex-China, small-cap, regional, thematic and bond strategies.

Types of emerging markets ETFs

Emerging-markets ETFs can provide very different types of exposure. Some track thousands of companies across multiple countries, while others focus on a single market, investment factor, sector or type of debt.

The main distinction is what the fund is designed to do. Broad equity ETFs are typically used as a core emerging-markets allocation, while ex-China, small-cap, regional, factor and thematic ETFs provide more targeted exposure. Emerging-market bond ETFs sit in a separate category because their returns are driven by interest rates, currencies and credit risk rather than company earnings.

The main indices behind emerging markets ETFs

The index is the most consequential choice, not the fund manager. Here is how the major benchmark families compare.

Broad emerging-market equity indices

Sources: MSCI Emerging Markets Index, Vanguard FTSE Emerging Markets UCITS ETF, Vanguard VWO and S&P Emerging BMI.

The difference is not simply the number of holdings. Each provider applies its own country-classification and index-construction rules, which can materially change country weights and portfolio overlap.

South Korea is the clearest example. MSCI classifies it as an emerging market, so Samsung Electronics and SK Hynix are included in the MSCI Emerging Markets indices. FTSE Russell and S&P Dow Jones Indices classify South Korea as developed, excluding it from their standard emerging-market benchmarks.

This can lead to meaningful performance differences when Korean equities move differently from the rest of the emerging-market universe. However, South Korea is not the only factor: differences in China exposure, company eligibility, market-cap coverage, constituent weights and rebalancing rules also affect returns.

Specialised emerging-market equity indices

Specialised indices modify a broad emerging-market universe by excluding a country, targeting a particular region or company size, or applying an alternative selection and weighting methodology.

Sources: Fund issuer factsheets and index documentation from iShares, WisdomTree, KraneShares and EMQQ Global.

These strategies should not be treated as interchangeable substitutes for a broad emerging-market ETF. An ex-China fund changes the portfolio’s country allocation, a small-cap fund changes its company-size exposure, and factor or thematic indices introduce an additional investment view.

Emerging-market bond indices

Emerging-market bond indices are divided mainly by issuer type and currency denomination.

Sources: iShares EMB, Vanguard VWOB, iShares LEMB and iShares CEMB.

Bond ETFs are assessed separately later in this guide because their performance is driven by interest rates, duration, currencies, credit quality and default risk. Measures such as equity valuations, earnings growth and sector weights are not directly comparable.

Why emerging markets ETFs can matter in a portfolio

Portfolios built around Singapore shares, the Straits Times Index, the S&P 500, the Nasdaq-100 or developed-market ETFs may have little or no direct exposure to emerging economies.

A broad emerging-markets ETF can add companies and return drivers that are underrepresented in these holdings, including:

• Taiwanese semiconductor manufacturers such as TSMC and MediaTek
• Indian banks, technology companies and consumer businesses
• Chinese internet platforms, financial institutions and industrial companies
• South Korean semiconductor and electronics companies under MSCI-based emerging-market indices
• Brazilian energy and materials producers
• Saudi banks and energy companies
• Southeast Asian markets such as Indonesia, Malaysia, Thailand and the Philippines

The exact diversification benefit depends on the index already held. IWDA tracks the MSCI World Index, which excludes emerging markets and South Korea. VHVG tracks a FTSE developed-market index, which includes South Korea but excludes other emerging economies. Pairing developed- and emerging-market ETFs from the same index family can therefore help avoid unintended gaps or duplication.

Investors holding an all-world ETF such as VWRA, ISAC, IMID or VT already own emerging-market companies at their respective index weights. Adding a separate emerging-markets ETF would increase that allocation rather than fill a missing part of the portfolio. This can be appropriate when an investor deliberately wants greater exposure to emerging economies, but it should be treated as an intentional portfolio tilt rather than a default step.

Top SGX-listed emerging markets ETFs

SGX offers one broad emerging-markets ETF alongside a wider selection of regional and single-country funds covering emerging Asia, China, India and Southeast Asia.

These ETFs trade during Singapore market hours and are available through brokerages that support SGX-listed securities. However, most provide targeted exposure rather than a diversified allocation across the full emerging-markets universe.

The ETFs below were selected by matching their underlying benchmarks against the SGX ETF list. Expense ratios are taken only from the POEMS ETF Screener. “Not available” means POEMS does not currently display an expense ratio for the fund.

Broad emerging markets and emerging Asia ETFs

H1N is the only ETF in this group providing broad exposure across the global emerging-markets universe. It covers large- and mid-cap companies from markets such as China, Taiwan, India, South Korea, Brazil and Saudi Arabia.

EAA/EAU is a regional fund rather than a broad emerging-markets ETF. Its benchmark selects 50 companies from India, Indonesia, Malaysia and Thailand, excluding several major emerging markets such as China, Taiwan, South Korea and Brazil.

China ETFs

The China ETFs provide materially different types of exposure:

• TID/LG9 offers the broadest exposure in this group, covering large- and mid-cap Chinese companies listed across mainland China, Hong Kong and overseas markets.
• MCN/MCS and JK8/VK8 focus on large mainland-listed A-share companies.
• SUN covers a broader group of 500 mainland-listed companies.
• GRO/GRU focuses on smaller companies within the CSI 1000.
• CXT/CXN/CXO and CXS/CXU track the growth-oriented ChiNext market.
• SCY combines companies listed on Shanghai’s STAR Market and Shenzhen’s ChiNext market.
• SHD and INC/ICH follow dividend-focused strategies.
• EVS/EVD targets electric vehicles, batteries and future-mobility companies.

These are dedicated China allocations. None provides the country diversification of a broad emerging-markets ETF such as H1N.

India ETFs

G1N provides conventional market-cap-weighted exposure to large- and mid-cap Indian companies.

QK9/I98 begins with a similar Indian equity universe but applies additional environmental, social, governance and climate-transition rules. Its holdings and company weights can therefore differ from a standard MSCI India ETF.

Both funds are concentrated in one country and should be treated as dedicated India allocations rather than substitutes for a broad emerging-markets fund.

Southeast Asia ETFs

SQQ/SQU is a regional technology ETF rather than a broad Southeast Asian market fund. Its benchmark focuses on technology-related companies from Southeast Asia and India.

UPD/UPU targets higher-dividend ASEAN companies while excluding REITs. Because the index includes Singapore, it combines developed- and emerging-market exposure under FTSE Russell’s country classifications.

KJ7 provides dedicated exposure to Indonesian large- and mid-cap companies.

VNM/VND and HD9 both provide Vietnam exposure but follow different benchmarks. VNM/VND holds 30 companies subject to sector limits, while HD9 tracks a broader liquid Vietnam market index.

Top US-domiciled emerging markets equity ETFs

US-domiciled ETFs offer the widest selection and generally the deepest trading liquidity for emerging-market exposure. The range includes broad market-cap-weighted funds, ex-China strategies, ESG portfolios, actively managed funds and targeted country or regional ETFs.

For non-US investors, the main trade-offs include US-dollar currency conversion, distributing rather than accumulating share classes, and exposure to US estate-tax rules. US-situated assets above US$60,000 may trigger an estate-tax filing requirement for a deceased non-US resident who was not a US citizen.

Top emerging markets equity ETFs

IEMG, VWO and SPEM provide the broadest market-cap coverage in this group, including large-, mid- and small-cap companies. However, they do not hold identical portfolios.

IEMG follows MSCI classifications and includes South Korea. VWO and SCHE follow FTSE benchmarks, which classify South Korea as a developed market. SPEM follows S&P’s country-classification and security-eligibility rules.

EEM tracks the standard MSCI Emerging Markets Index and excludes small-cap companies. Its higher expense ratio reflects its role as an established, highly traded ETF rather than a low-cost core holding.

The specialised funds change the exposure further:

• EMXC removes China from the portfolio.
• FNDE weights companies using fundamental measures rather than market capitalisation.
• DFAE and DFEM are actively managed systematic portfolios.
• ESGE applies business-involvement screens and ESG reweighting.

Top emerging Asia-Pacific ETFs

The first three funds also appear in the broader Emerging Markets category because emerging-market indices are heavily concentrated in Asia. ESGE also appears in both categories because it applies an ESG strategy to a broad emerging-market universe.

The remaining funds provide more targeted exposure:

• INDA is a dedicated India allocation.
• MCHI provides broad China exposure.
• KWEB concentrates on Chinese internet and ecommerce companies.
• FXI holds 50 large Hong Kong-listed Chinese companies.
• AAXJ covers Asia excluding Japan but is not a pure emerging-markets ETF because it also includes developed markets such as Hong Kong and Singapore.
• DEM remains geographically diversified but tilts towards higher-dividend companies.

Country and thematic ETFs can be more concentrated than broad emerging-market funds. Their performance may depend heavily on one economy, regulatory system or group of industries.

Top emerging Europe ETFs

ETFdb currently lists only two US-traded Emerging Europe ETFs. Both are single-country funds rather than diversified regional ETFs.

EPOL and TUR should be treated as targeted country allocations. They are more exposed to domestic politics, currencies, interest rates and local sector concentration than a broad emerging-markets ETF.

Top Ireland-domiciled UCITS emerging markets equity ETFs

Ireland-domiciled UCITS ETFs are commonly used by investors who want emerging-market exposure without directly holding US-domiciled ETF shares. The ETF shares are Irish-situated rather than US-situated, avoiding direct US estate-tax exposure at the fund-share level.

These funds are generally available through the London Stock Exchange and other European exchanges. The same fund may trade under different tickers and currencies, so investors should confirm the exact fund and share class before placing an order.

The main choices include:

• Broad all-cap exposure through MSCI Emerging Markets IMI
• Standard large- and mid-cap exposure through MSCI Emerging Markets
• FTSE Emerging exposure, which excludes South Korea
• Regional exposure through MSCI Emerging Markets Asia
• Specialised ex-China, small-cap, dividend, factor, Shariah, thematic or active strategies

Top Ireland-domiciled broad emerging markets ETFs

The iShares Core MSCI Emerging Markets IMI UCITS ETF provides the broadest company-size coverage. Its benchmark includes large-, mid- and small-cap companies, while the standard MSCI Emerging Markets and FTSE Emerging indices focus on large- and mid-cap stocks.

The Xtrackers, iShares, HSBC, State Street, Invesco, UBS and iShares Swap funds provide standard MSCI Emerging Markets exposure. The main differences are fund size, income treatment, TER and whether the fund obtains exposure by directly holding securities or using derivatives.

The two Vanguard funds and the Franklin ETF track FTSE Emerging. FTSE Russell classifies South Korea as a developed market, so companies such as Samsung Electronics and SK Hynix are excluded. This gives them a different country allocation from MSCI Emerging Markets ETFs.

The lowest TERs in the table belong to:

• Invesco MSCI Emerging Markets UCITS ETF at 0.09%
• Franklin FTSE Emerging Markets UCITS ETF at 0.11%
• UBS MSCI EM SF UCITS ETF and iShares MSCI EM Swap UCITS ETF at 0.14%
• HSBC MSCI Emerging Markets UCITS ETF at 0.15%

However, TER should not be assessed in isolation. Some of the lower-cost funds are considerably smaller or use synthetic exposure. Investors should also compare fund size, trading spread, tracking difference and the underlying benchmark.

Top Ireland-domiciled emerging Asia ETFs

The MSCI Emerging Markets Asia Index tracks large- and mid-cap companies from Asian emerging markets. It is more concentrated than a global emerging-markets index and excludes emerging economies in Latin America, the Middle East, Africa and Europe.

Both funds track the same benchmark and reinvest their dividends. The iShares fund is substantially larger and charges a lower TER of 0.20%, compared with 0.55% for the State Street fund.

An emerging Asia ETF is not a substitute for a globally diversified emerging-markets ETF. It is concentrated in markets such as China, Taiwan, India and South Korea, with no exposure to Brazil, Saudi Arabia, South Africa or Mexico.

Specialised Ireland-domiciled UCITS emerging markets ETFs

Specialised ETFs modify broad emerging-market exposure by excluding a major country, focusing on a particular company size or applying an alternative investment strategy.

The iShares MSCI EM Asia UCITS ETF is not repeated here because it is already included in the emerging Asia table.

These funds serve different portfolio objectives:

• Ex-China: Removes China and raises the relative weights of Taiwan, India, South Korea and other emerging markets.
• Small cap: Adds smaller companies that are absent from standard MSCI Emerging Markets and FTSE Emerging indices.
• Minimum volatility: Adjusts company and sector weights to seek a less volatile return profile.
• Dividend: Tilts towards higher-yielding companies, often increasing exposure to financials, energy, materials and state-linked businesses.
• Shariah-compliant: Applies business-activity and financial-ratio screens that can materially change sector exposure.
• Thematic: Concentrates on internet, ecommerce, digital payments and online-platform companies.
• Active: Allows the manager to depart from market-cap weights based on company characteristics such as valuation and profitability.

These ETFs should not be treated as direct substitutes for a broad emerging-markets fund unless the investor deliberately wants that change in exposure.

Which Ireland-domiciled emerging markets ETF should you choose?

The main options can be grouped by portfolio role:

• iShares Core MSCI Emerging Markets IMI UCITS ETF for the broadest large-, mid- and small-cap exposure
• Xtrackers, iShares, HSBC or State Street MSCI Emerging Markets ETFs for established standard large- and mid-cap exposure
• Invesco, UBS or iShares Swap ETFs for lower-cost MSCI Emerging Markets exposure
• Vanguard or Franklin FTSE Emerging Markets ETFs for FTSE-based exposure that excludes South Korea
• iShares MSCI EM Asia UCITS ETF for a more concentrated emerging Asia allocation
• iShares MSCI EM ex-China UCITS ETF for controlling China separately
• Small-cap, dividend, factor, Shariah, thematic or active ETFs for a specific portfolio tilt

The underlying index should be selected before comparing fees. MSCI Emerging Markets IMI provides broader company-size coverage, MSCI Emerging Markets Asia removes non-Asian markets, and FTSE Emerging changes the country allocation by excluding South Korea.

Income treatment also matters. Accumulating funds automatically reinvest dividends, while distributing funds pay them into the investor’s brokerage account.

Broad, ex-China, ex-Korea and small-cap emerging markets ETFs

These strategies provide materially different equity exposure and should not be treated as interchangeable options.

A broad emerging-markets ETF provides the most complete core allocation. The other three strategies deliberately change that exposure:

• Ex-China removes Chinese equities and increases the relative weights of Taiwan, India and South Korea.
• Ex-Korea excludes South Korea because FTSE Russell classifies it as a developed market.
• Small cap focuses on smaller companies rather than the large businesses that dominate broad indices.

Ex-China, ex-Korea and small-cap funds are not automatically more diversified. They remove or emphasise specific parts of the market and should be treated as deliberate portfolio tilts rather than improvements on a broad core fund.

Factor, dividend, ESG, Shariah and active emerging markets ETFs

Each strategy changes how stocks are selected and weighted relative to a standard market-cap index. The portfolio effect determines whether any of these make sense in a given allocation.

Source: Fund issuer factsheets; index provider documentation.

Emerging-market bond ETFs

Emerging-market bond ETFs are a separate asset class from emerging-market equity ETFs. They should be evaluated using fixed-income measures such as yield to maturity, duration, credit quality and currency exposure rather than equity-market returns.

The main distinction is between bonds denominated in US dollars and bonds denominated in the issuer’s local currency. Investors must also decide whether they want sovereign, corporate, investment-grade or high-yield exposure.

Main types of emerging-market bond ETFs

USD sovereign and quasi-sovereign bond ETFs

These funds invest primarily in US dollar-denominated bonds issued by emerging-market governments and government-related entities.

Because the bonds are issued in US dollars, investors are not directly exposed to fluctuations in each issuer’s local currency. However, the funds remain sensitive to US Treasury yields and changes in emerging-market sovereign credit spreads.

Broad USD sovereign and corporate bond ETFs

BEMB provides wider hard-currency exposure than a conventional sovereign bond ETF by combining government, quasi-government and corporate issuers.

This category can provide more diversified issuer exposure, but it combines sovereign and corporate risks within a single portfolio.

Local-currency sovereign bond ETFs

Local-currency funds invest in government debt denominated in the currency of the issuing country.

Local-currency bonds can benefit when emerging-market currencies strengthen against the investor’s base currency. The reverse is also true: currency depreciation can offset or exceed the income generated by the bonds.

EMLC and EBND are important omissions from the original table because they are larger US-listed local-currency funds than LEMB.

USD corporate bond ETFs

Corporate bond ETFs invest in debt issued by emerging-market companies rather than governments.

Corporate bond performance depends on the issuer’s financial health as well as broader emerging-market conditions. These funds may also have meaningful exposure to companies that are partly or fully state owned.

USD high-yield emerging-market bond ETFs

High-yield funds focus on issuers rated below investment grade.

EMHY and HYEM should not be treated as identical. EMHY can hold both sovereign and corporate issuers, while HYEM focuses on below-investment-grade non-sovereign bonds.

High-yield emerging-market bonds generally offer higher income, but they also carry greater default, restructuring and liquidity risks.

Shorter-duration emerging-market bond ETFs

Some funds limit their maturity range to reduce sensitivity to long-term interest-rate movements.

Shorter duration can reduce interest-rate sensitivity, but it does not remove sovereign, corporate or emerging-market credit risk.

UCITS ETFs vs US-listed ETFs

The choice of domicile affects tax exposure, share class options and exchange access. For Singapore investors, these structural differences often matter more than the expense ratio gap.

The 15% versus 30% US-dividend withholding comparison applies less directly to EM ETFs. EM underlying companies pay dividends from their own countries, where local withholding rates vary. The Ireland versus US domicile decision primarily affects the secondary withholding on fund-level distributions to the investor, not the taxes already deducted at the company level.

Accumulating vs distributing emerging markets ETFs

 Singapore has no personal capital gains tax and generally no tax on dividend income for individual investors. Both share classes are therefore equivalent from a Singapore personal tax perspective. Choose accumulating for the reinvestment convenience unless you have a specific income need. Accumulating funds still incur any withholding taxes applied to underlying dividends before reinvestment.

Physical vs synthetic emerging markets ETFs

 Synthetic replication is used in emerging markets precisely where physical replication is difficult: markets with foreign ownership caps, costly local settlement, or significant tracking drag. For broad MSCI or FTSE indices, either structure is generally acceptable for a long-term investor. Check the fund factsheet to confirm the replication method.

The real cost of owning an emerging markets ETF

The TER is the starting point, not the full picture.

 Total cost formula: TER + tracking difference + dividend tax drag + brokerage + FX conversion + bid-ask spread

For a long-term investor using a low-cost brokerage, total annual ownership cost for EIMI or the Invesco MSCI EM UCITS ETF is typically under 0.30%. That compares to 1.0 to 1.5% for most actively managed EM unit trusts.

Where to buy emerging markets ETFs in Singapore

Once you have decided which emerging-markets exposure suits your portfolio, the next step is choosing a platform that provides access to the ETF’s exchange listing.

This matters because the ETFs covered in this guide trade across different markets:

• Ireland-domiciled UCITS ETFs such as EIMI, SEMA, VFEG and EXCS are commonly listed on the London Stock Exchange.
• US-domiciled ETFs such as IEMG, VWO, EEM and EMXC trade on US exchanges.
• SGX provides access to H1N and a selection of emerging Asia, China, India and Southeast Asia ETFs, which may be more convenient for SGD funding and SRS investing.

Investors generally have three routes: local bank brokerages, global or fintech brokers, and simplified investment platforms.

Can you use SRS to buy emerging markets ETFs?

Yes, but direct access depends on the investment platform. Many traditional SRS brokerages offer SGX-listed products but provide limited access to London-listed UCITS ETFs such as EIMI, SEMA and VFEG.

StashAway gives investors two ways to put their SRS funds to work:

General Investing provides professionally managed, globally diversified ETF portfolios. StashAway handles portfolio construction, rebalancing and ongoing risk management.

ETF Explorer lets investors choose from more than 90 asset classes, including broad emerging markets and regional equity exposures, using their SRS funds. Investors can make one-time deposits or set up recurring investments.

SRS contributions may qualify for tax relief, subject to the overall personal income tax relief cap of S$80,000. Contributions must be made by 31 December, or by the earlier cut-off imposed by your SRS operator, to qualify for relief in the following Year of Assessment.

Direct availability of a specific ticker should not be assumed. Instead of transferring SRS funds to a conventional brokerage and searching for eligible listings, StashAway lets investors access emerging-market exposure through its managed portfolios or ETF Explorer.

Emerging markets ETF vs all-world ETF: do you need both?

An emerging-markets ETF and an all-world ETF can overlap substantially, but they serve different portfolio roles.

An all-world ETF already includes emerging markets at their global market-cap weight. Adding a separate emerging-markets ETF is therefore unnecessary for basic market coverage, but it can be used to increase the portfolio’s allocation to emerging economies.

EIMI provides dedicated exposure to emerging markets and includes large-, mid- and small-cap companies. It can complement a portfolio that otherwise holds only developed-market equities.

VWRA already holds companies from both developed and emerging markets. Its emerging-market allocation rises or falls automatically as those markets change in value relative to the global market.

When might you need both?

A separate emerging-markets ETF may make sense in several situations:

• You hold an S&P 500 ETF: The portfolio has US exposure but no direct allocation to other developed markets or emerging markets.
• You hold an MSCI World or FTSE Developed ETF: These indices exclude emerging markets, so an ETF such as EIMI can complete the global allocation.
• You want more emerging-market exposure than the global market weight: Adding EIMI to VWRA creates a deliberate emerging-markets overweight.
• You want to control the developed- and emerging-market split yourself: Separate developed-market and emerging-market ETFs allow the allocation to be set and rebalanced manually.

When is an all-world ETF enough?

Investors holding VWRA, ISAC, IMID, VT or another all-world ETF already have emerging-market exposure.

Holding a separate emerging-markets ETF is not necessary simply to obtain coverage. Adding one means intentionally increasing emerging markets above their market-cap weight.

For example, a portfolio invested entirely in VWRA receives roughly one-tenth of its exposure from FTSE-classified emerging markets. Adding EIMI would increase exposure to markets such as Taiwan, China and India rather than filling a completely missing allocation.

Be aware of index-classification differences

EIMI and VWRA use different index providers.

MSCI classifies South Korea as an emerging market, so it is included in EIMI. FTSE Russell classifies South Korea as developed, so VWRA also holds South Korean companies but counts them within its developed-market allocation.

As a result, adding EIMI to VWRA increases South Korea exposure as well as exposure to countries that both providers classify as emerging.

Adding specialised emerging-market ETFs

Specialised ETFs create more targeted portfolio tilts:

• Adding EXCS to a broad emerging-markets ETF increases the allocation to emerging markets outside China. It does not remove the China exposure already held in the broad ETF.
• Adding IEMS to EIMI overweights emerging-market small caps because EIMI already includes small-cap companies.
• Adding IEMS to a standard large- and mid-cap EM ETF adds a company-size segment that the original fund does not cover.
• Adding a country ETF increases dependence on that country rather than improving broad diversification.

The decision is therefore not simply whether to own both funds. It is whether the portfolio should hold emerging markets at their global market-cap weight or at a deliberately higher allocation.

How emerging markets ETFs can fit into your portfolio

Emerging markets ETFs can fill a missing allocation in a portfolio built around the S&P 500, MSCI World or other developed-market indices. They can also be added to an all-world portfolio to deliberately increase exposure to economies such as China, India, Taiwan, South Korea and Brazil.

The important part is understanding what the ETF actually owns. A broad MSCI or FTSE emerging-markets fund can serve as the main allocation, while ex-China, regional, country, small-cap and thematic ETFs make more targeted bets. Index-provider differences also matter, particularly whether South Korea is classified as emerging or developed and whether small-cap companies are included.

Domicile, income treatment, fees, currency exposure and platform costs then determine how efficiently that allocation is delivered. Emerging markets can be more volatile and exposed to political, regulatory and currency risks, but they can also reduce a portfolio’s dependence on developed markets and US companies.

Used with a clear portfolio role and a long-term horizon, an emerging markets ETF can provide access to a wider set of economies, industries and sources of growth without requiring investors to select individual countries or companies.