Emerging markets equities are experiencing a resurgence, with the MSCI Emerging Markets index outperforming the S&P 500 by nearly double last year and rising 7.4% year to date, while the S&P 500 has dipped 1.64%. However, stock selection in key markets like Brazil, China, and India remains challenging due to a lack of focus from U.S. analysts. Exchange-traded funds (ETFs) offer a solution, with the Schwab Fundamental Emerging Markets Equity ETF (FNDE) standing out for its unique approach.
Unlike typical capitalization-weighted ETFs, FNDE tracks the RAFI Fundamental High Liquidity Emerging Markets index, emphasizing cash flow, sales, and shareholder returns. This strategy has led FNDE to outperform the average emerging markets ETF over the past five years. With significant allocations to commodities and technology, including a strong AI component, FNDE positions itself for potential growth while also benefiting from robust shareholder activities in regions like South Korea and China.
For investors looking to diversify into emerging markets, FNDE offers a compelling option, combining a value-oriented approach with exposure to dynamic sectors. Its low expense ratio of 0.39% further enhances its attractiveness in a competitive ETF landscape.
Source: fool.com