How do emerging markets ETFs differ from developed markets ETFs?

Emerging markets ETFs invest in countries with developing economies, which often have higher growth but more instability. Developed-market ETFs focus on established economies, such as Europe and Japan, with more mature financial systems and lower volatility.

What is the tax treatment for dividends and capital gains from emerging markets ETFs?

Dividends from emerging markets ETFs may be subject to foreign withholding taxes at source. In contrast, capital gains are taxed under U.S. or local tax laws, depending on the investor's location and account type.

Does Vanguard have an emerging market ETF?

Vanguard offers both the Vanguard FTSE Emerging Markets ETF and the Vanguard Emerging Markets Government Bond ETF (NASDAQ:VWOB).

Are emerging market ETFs suitable for beginner investors?

Generally, emerging-market ETFs aren't the best choice for beginners looking for a tactical trade or an overweight position, given their high volatility and political risks. However, as a small allocation within a globally diversified portfolio, they can be a good way to add growth potential without taking on too much concentrated risk.

Can emerging market ETFs provide dividends?

Yes, most emerging-market ETFs pay dividends because many of their underlying companies distribute earnings. The drawback is tax inefficiency, as payouts are usually treated as foreign income, and many countries apply withholding tax at the source before the dividend even reaches investors. Keeping these ETFs in a tax-sheltered account can help offset some of those issues.

How often should I review my emerging market ETF investments?

Quarterly reviews are reasonable, even if only to reinvest distributions or confirm allocations remain aligned with your plan. A more thorough review at least once per year is useful, especially when tax information becomes available and you reassess portfolio balance.

5 Best Emerging Markets ETFs to Buy in 2026

By Tony Dong – Updated Apr 9, 2026 at 10:58 PM EST | Fact-checked by Frank Bass

Key Points

Emerging markets ETFs provide access to fast-growing economies with diversified risk.
Top ETFs include iShares Core MSCI, Vanguard FTSE, and Avantis, with various expense ratios.
Invest wisely in emerging markets ETFs by understanding fees, diversification, and liquidity.

An emerging markets exchange-traded fund (ETF) is a listed investment vehicle that invests in stocks from developing nations. They can offer investors exposure to economies experiencing rapid growth and industrialization, but still facing higher volatility and structural challenges than developed nations.

Many of the world's largest non-NATO economies belong to BRICS countries -- Brazil, Russia, India, China, and South Africa -- all of which are classified as emerging market countries. Beyond this, emerging markets also include many South American and Middle Eastern countries.

Investing in emerging markets through an ETF helps avoid the complexities of currency conversion, provides diversified exposure across multiple sectors and regions, and reduces the risks of picking individual stocks in unpredictable economies. However, they can come with higher fees and greater principal risk.

Loading paragraph...

Top emerging markets ETFs to consider

Here's a look at some of the best overall emerging markets ETFs, offering broad diversification, exposure to high-growth economies, and suitability for a wide range of investors. Some are index funds, while others are actively managed.

Loading paragraph...

Top Emerging Markets ETF Comparison (as of April 2026)
ETF Name and Ticker	Expense Ratio	5-Year Annualized Return
iShares Core MSCI Emerging Markets ETF (IEMG)	0.09%	4.59%
Vanguard FTSE Emerging Markets ETF (VWO)	0.06%	4.05%
State Street SPDR Portfolio Emerging Markets ETF (SPEM)	0.07%	4.06%
Schwab Emerging Markets Equity ETF (SCHE)	0.07%	3.84%
Avantis Emerging Markets Equity ETF (AVEM)	0.33%	7.04%

Loading table...

1. iShares Core MSCI Emerging Markets ETF

The iShares Core MSCI Emerging Markets ETF (IEMG -0.11%) is one of the most comprehensive emerging markets ETFs. It holds more than 2,600 stocks across large-, mid-, and small-cap companies within the MSCI Emerging Markets Investable Market Index.

Loading paragraph...

NYSEMKT: IEMG

iShares - iShares Core Msci Emerging Markets ETF

Today's Change

(-0.11%) $-0.09

Current Price

$83.47

Key Data Points

Day's Range

$83.35 - $84.09

52wk Range

$56.38 - $84.10

Volume

25.7M

Loading company_card...

The fund is market-cap weighted, meaning larger economies dominate its holdings. In mid-2026, China, India, Taiwan, and South Korea made up the bulk of the portfolio.

This ETF is widely popular, with $144 billion in assets under management (AUM), making it one of the most liquid emerging markets ETFs and featuring a tight 0.01% 30-day median bid-ask spread. While it has lagged U.S. ETFs over the last decade, this reflects the relative strength of the U.S. dollar, which has weighed on foreign equity returns.

Loading paragraph...

2. Vanguard FTSE Emerging Markets ETF

The Vanguard FTSE Emerging Markets ETF (VWO -0.03%) is one of the largest and most diversified emerging markets ETFs. It tracks the FTSE Emerging Markets All Cap China A Inclusion Index for a low 0.06% expense ratio.

Loading paragraph...

NYSEMKT: VWO

Vanguard FTSE Emerging Markets ETF

Today's Change

(-0.03%) $-0.02

Current Price

$59.88

Key Data Points

Day's Range

$59.87 - $60.27

52wk Range

$46.73 - $61.03

Volume

7.5M

Loading company_card...

One key difference between this fund and the iShares Core MSCI Emerging Markets ETF is that it excludes South Korea. This is because FTSE classifies it as a developed market, whereas MSCI classifies it as an emerging market.

Another unique feature is the China A Inclusion designation. This designation means the fund holds Chinese stocks listed on the Shanghai and Shenzhen exchanges, rather than just H-shares traded in Hong Kong.

With more than 5,900 holdings, the Vanguard FTSE Emerging Markets ETF is even more diversified than the iShares Core MSCI Emerging Markets ETF, making it a broad-based, cost-effective way to access emerging markets. It is also available as a mutual fund.

3. State Street SPFR Portfolio Emerging Markets ETF

The State Street SPDR Portfolio Emerging Markets ETF (SPEM -0.17%) follows the S&P Emerging BMI Index (Broad Market Index), which covers small-, mid-, and large-cap stocks across emerging markets.

Loading paragraph...

NYSEMKT: SPEM

State Street SPDR Portfolio Emerging Markets ETF

Today's Change

(-0.17%) $-0.09

Current Price

$52.33

Key Data Points

Day's Range

$52.29 - $52.63

52wk Range

$40.66 - $53.03

Volume

2.3M

Loading company_card...

Loading paragraph...

NYSEMKT: SCHE

Schwab Strategic Trust - Schwab Emerging Markets Equity ETF

Today's Change

(-0.17%) $-0.06

Current Price

$36.34

Key Data Points

Day's Range

$36.32 - $36.59

52wk Range

$28.48 - $37.06

Volume

4.1M

Loading company_card...

Despite including smaller stocks, the Schwab Emerging Markets Equity ETF is market-cap-weighted, meaning larger companies dominate its portfolio. This has resulted in a weighted average market capitalization of $327 billion, giving the fund a tilt toward large-cap stocks, similar to other major emerging markets ETFs.

Loading paragraph...

5. Avantis Emerging Markets Equity ETF

Unlike traditional index-tracking ETFs, the Avantis Emerging Markets Equity ETF (AVEM -0.04%) takes an active approach with its stock selection and weighting.

Loading paragraph...

NYSEMKT: AVEM

American Century ETF Trust - Avantis Emerging Markets Equity ETF

Today's Change

(-0.04%) $-0.04

Current Price

$96.94

Key Data Points

Day's Range

$96.71 - $97.69

52wk Range

$63.91 - $97.69

Volume

2.3M

Loading company_card...

The Avantis Emerging Markets Equity ETF systematically screens stocks based on multiple factors, prioritizing smaller companies, undervalued stocks, and highly profitable businesses. This factor-based strategy aims to outperform traditional market-cap-weighted emerging-market ETFs, and historically, it has.

Despite its active approach, this fund remains broadly diversified, holding more than 3,500 stocks across various emerging markets. It also maintains a reasonable 0.33% expense ratio, making it an affordable choice for investors seeking enhanced exposure to emerging markets.

Criteria for selecting the top emerging markets ETFs

Diversification: Avoid funds overly concentrated in one country (like China) or a single sector, unless that is your goal. Look for ETFs spanning multiple regions and industries to reduce risks.
Fees: Low costs are crucial for long-term returns. Passive ETFs often charge under 0.10%, while some active funds stay competitive under 0.50%.
Size and liquidity: Favor ETFs with at least $1 billion in assets under management, which generally means tighter bid-ask spreads, better liquidity, and lower tracking error.

Benefits and risks of investing in emerging market ETFs

Benefits

Potential for outperformance when U.S. or other developed markets lag, or when the U.S. dollar falters.
Access to high-growth companies, from Chinese e-commerce to Brazilian natural resources.
Expanding middle-class populations in many emerging economies, such as India, create long-term demand for goods and services.

Risks

Higher volatility due to country-specific risks such as political instability, corruption, or uneven regulation.
Potential for nationalization or forced delisting of companies if governments tighten control or conflicts arise.
Vulnerable to foreign exchange swings, with a rising U.S. dollar often creating headwinds unless the ETF uses currency hedging.

Loading paragraph...

Tips for investing in emerging market ETFs

Emerging market ETFs can add diversification and growth potential, but they require more homework than U.S. or developed-market funds. A few practical steps can help manage those risks:

Read the index methodology carefully: Not all emerging-market ETFs define their universes the same way. MSCI and FTSE differ on country classifications. South Korea, for example, may be treated as developed in one index and emerging in another. Some China-focused ETFs may exclude A-shares and only hold H-shares or offshore listings. These differences can materially change exposure.
Decide whether to hedge currency risk: Most emerging market ETFs are unhedged, meaning returns are affected by local currencies relative to the U.S. dollar. Currency swings can either boost or hurt returns. Hedging can reduce volatility, but it adds cost and may limit upside. The right choice depends on your time horizon and tolerance for currency risk.
Check liquidity and trading costs: ETF liquidity depends heavily on the liquidity of the underlying markets. Emerging market ETFs often have wider bid-ask spreads than U.S. equity ETFs. Reviewing the 30-day median bid-ask spread is a practical way to estimate trading friction. Wider spreads mean higher implicit costs when buying or selling.

Loading paragraph...

FAQ

Emerging markets ETFs FAQ

Loading faq...

Tony Dong has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard FTSE Emerging Markets ETF. The Motley Fool has a disclosure policy.

5 Best Emerging Markets ETFs to Buy in 2026

Key Points

Top emerging markets ETFs to consider

1. iShares Core MSCI Emerging Markets ETF

Key Data Points

2. Vanguard FTSE Emerging Markets ETF

Key Data Points

3. State Street SPFR Portfolio Emerging Markets ETF

Key Data Points

Key Data Points

5. Avantis Emerging Markets Equity ETF

Key Data Points

Criteria for selecting the top emerging markets ETFs

Benefits and risks of investing in emerging market ETFs

Benefits

Risks

Tips for investing in emerging market ETFs

Related investing topics

7 Best ETFs to Buy in May 2026

Best S&P 500 ETFs to Buy in 2026

Best VIX ETFs for 2026 and How to Invest

Best International ETFs to Buy in 2026

FAQ

Emerging markets ETFs FAQ

How do emerging markets ETFs differ from developed markets ETFs?

How do emerging markets ETFs differ from developed markets ETFs?

What is the tax treatment for dividends and capital gains from emerging markets ETFs?

What is the tax treatment for dividends and capital gains from emerging markets ETFs?

Does Vanguard have an emerging market ETF?

Does Vanguard have an emerging market ETF?

Are emerging market ETFs suitable for beginner investors?

Are emerging market ETFs suitable for beginner investors?

Can emerging market ETFs provide dividends?

Can emerging market ETFs provide dividends?

How often should I review my emerging market ETF investments?

How often should I review my emerging market ETF investments?

Read Next

Stocks Mentioned

Motley Fool Stock Advisor’s Latest Pick

Premium Investing Services

Top emerging markets ETFs to consider

1. iShares Core MSCI Emerging Markets ETF

Key Data Points

Key Data Points

Key Data Points

Key Data Points

Key Data Points

Criteria for selecting the top emerging markets ETFs

Benefits and risks of investing in emerging market ETFs

Benefits

Risks

Tips for investing in emerging market ETFs

7 Best ETFs to Buy in May 2026

Best S&P 500 ETFs to Buy in 2026

Best VIX ETFs for 2026 and How to Invest

Best International ETFs to Buy in 2026

Emerging markets ETFs FAQ

How do emerging markets ETFs differ from developed markets ETFs?

How do emerging markets ETFs differ from developed markets ETFs?

What is the tax treatment for dividends and capital gains from emerging markets ETFs?

What is the tax treatment for dividends and capital gains from emerging markets ETFs?

Does Vanguard have an emerging market ETF?

Does Vanguard have an emerging market ETF?

Are emerging market ETFs suitable for beginner investors?

Are emerging market ETFs suitable for beginner investors?

Can emerging market ETFs provide dividends?

Can emerging market ETFs provide dividends?

How often should I review my emerging market ETF investments?

How often should I review my emerging market ETF investments?

2. Vanguard FTSE Emerging Markets ETF

3. State Street SPFR Portfolio Emerging Markets ETF

4. Schwab Emerging Markets Equity ETF

5. Avantis Emerging Markets Equity ETF