An emerging markets exchange-traded fund (ETF) is a listed vehicle that invests in stocks from developing economies. 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.
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.
Five best emerging markets ETFs in 2026
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.
NYSEMKT: IEMG
Key Data Points
The fund is market-cap weighted, meaning larger economies dominate its holdings. In early 2026, China, India, Taiwan, and South Korea made up the bulk of the portfolio.
This ETF is widely popular, with $128 billion in assets under management (AUM), making it one of the most liquid emerging markets ETFs, with a tight 0.01% 30-day median bid-ask spread. While its 10-year annualized return sits at 8.35%, this reflects the underperformance of emerging markets relative to developed markets and the strength of the U.S. dollar, which has weighed on foreign equity returns.
2. Vanguard FTSE Emerging Markets ETF
The Vanguard FTSE Emerging Markets ETF (VWO +0.28%) 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 0.07% expense ratio.
NYSEMKT: VWO
Key Data Points
One key difference between this fund and the iShares Core MSCI Emerging Markets ETF is that it does not include South Korea because FTSE classifies it as a developed market. Another unique feature is the China A Inclusion designation. This designation means the fund holds Chinese stocks from 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. SPDR Portfolio Emerging Markets ETF
The SPDR Portfolio Emerging Markets ETF (SPEM +0.26%) is part of SPDR's Portfolio lineup, which focuses on broad, diversified, and low-cost index-tracking funds. This ETF follows the S&P Emerging BMI Index (Broad Market Index), which covers small-, mid-, and large-cap stocks across emerging markets.
NYSEMKT: SPEM
Key Data Points
While the underlying index includes over 7,200 stocks, the SPDR Portfolio Emerging Markets ETF holds slightly more than 3,000 due to the sampling methodology. The fund avoids illiquid or extremely small companies that don't significantly affect overall market returns, improving efficiency while maintaining broad exposure.
The ETF is market cap-weighted, with its largest country allocations in China, India, Taiwan and Brazil. The SPDR Portfolio Emerging Markets ETF has posted an 8.62% annualized return over 10 years. It remains a low-cost option with a 0.07% expense ratio, making it a solid choice for investors looking for broad emerging market exposure with minimal fees.
4. Schwab Emerging Markets Equity ETF
The Schwab Emerging Markets Equity ETF (SCHE +0.20%) tracks the FTSE Emerging Index while maintaining a low 0.07% expense ratio. The fund holds around 2,100 stocks, offering a well-diversified mix of small-, mid-, and large-cap companies.
NYSEMKT: SCHE
Key Data Points
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 $237 billion, giving the fund a tilt toward large-cap stocks, similar to other major emerging markets ETFs.
Over the past 10 years, the Schwab Emerging Markets Equity ETF has delivered an 8.31% annualized return. This reflects the broader underperformance of emerging markets compared to developed markets but still serves as a low-cost option for long-term investors seeking emerging market exposure.
5. Avantis Emerging Markets Equity ETF
Unlike traditional index-tracking ETFs, the Avantis Emerging Markets Equity ETF (AVEM +0.29%) takes an active approach. This fund selects emerging market stocks with higher expected returns rather than simply following a benchmark.
NYSEMKT: AVEM
Key Data Points
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 over time.
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 emerging market exposure.
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
- Access to high-growth companies, from Chinese e-commerce to Brazilian natural resources
- Expanding middle-class populations in many emerging economies 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
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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 the universe 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.
