So emerging markets are having a moment. Like, a really good moment. We’re talking 33% returns this year while your neighbor’s still bragging about their 8% savings account. But here’s the thing about emerging markets – they’re kind of like that friend who’s either crushing it or completely falling apart, with very little middle ground.
The good news? You don’t have to become an expert on Vietnamese banking regulations or Brazilian mining companies to get in on this action. That’s what ETFs are for – they’re basically the “set it and forget it” rotisserie chicken of investing, except instead of chicken, you get a diversified basket of stocks from countries your geography teacher probably mentioned once.
1. Hartford Multifactor Emerging Markets ETF (ROAM)
First up is ROAM, which sounds like something you’d name your dog, but it’s actually been quietly crushing it with 30% gains this year. Over five years, it’s averaged 10.2% annually, which is the kind of performance that makes you feel smart at dinner parties.
What makes ROAM special? It’s got this whole “multifactor” thing going on, which is finance-speak for “we don’t put all our eggs in one basket, and we’re pretty picky about which eggs we choose.” They screen for value, diversification, and basically try not to buy stocks that are more expensive than a Manhattan apartment.
The portfolio reads like a greatest hits of Asian tech: SK Hynix, Samsung, Taiwan Semiconductor. You know, the companies that make the chips in your phone work. About 300 stocks total, spread across China (22%), India (18%), Taiwan (15%), and South Korea (11%). It’s like a world tour, but for your money.
2. Schwab Fundamental Emerging Markets Equity ETF (FNDE)
Then there’s FNDE, which has managed 27% this year and 10.1% over five years. Not quite as good as ROAM, but still the kind of returns that make your financial advisor nod approvingly.
FNDE’s secret sauce is “fundamental weighting,” which means instead of just buying the biggest companies, they look at actual business metrics like sales, cash flow, and dividends. It’s like judging a restaurant by the food instead of just the size of the building.
They hold about 368 stocks, with heavy hitters like Taiwan Semiconductor, Alibaba, and Vale. The geographic split leans more heavily into China (38%) and Taiwan (18%), with some Brazil and India thrown in for flavor.
The Bottom Line
Both ETFs have consistently beaten the MSCI Emerging Markets Index over longer time periods, which is like being the kid who actually studied for the test while everyone else was winging it.
Are emerging markets risky? Sure. But so is keeping all your money in a savings account while inflation eats your purchasing power like a hungry teenager demolishes a pizza. Sometimes the biggest risk is not taking any risk at all.
Just remember: past performance doesn’t guarantee future results, diversification is your friend, and never invest money you can’t afford to lose. But if you’re looking to spice up your portfolio with some international flavor, these two ETFs might just be your ticket to the global party.