The Vanguard FTSE Emerging Markets ETF (VWO +0.75%) is an exchange-traded fund (ETF) managed by the Vanguard Group, a top asset management firm owned by investors in its funds around the world. The VWO ETF had more than $130.5 billion in assets under management as of late 2025.
The fund's diversification, relatively low cost, and focus have made it a popular choice with many investors across trading styles and risk tolerance levels. This guide will teach you everything you need to know about the Vanguard FTSE Emerging Markets ETF and how to invest in ETFs for beginners.
Exchange-Traded Fund (ETF)
What is the Vanguard FTSE Emerging Markets ETF?
Managed by the Vanguard Group, the VWO ETF invests in stocks of companies in various emerging markets around the world, including Brazil, Taiwan, China, and South Africa.
Emerging markets are generally characterized as countries changing into full-fledged, developed economies within the global marketplace. There are many hallmarks of emerging markets, but factors such as accelerating economic growth and rapid industrialization are two distinctive features.
The ETF invests in the same companies within the FTSE Emerging Markets All Cap China A Inclusion Index and aims to closely mirror its returns. Given the range of companies and regions represented in the ETF, investors should be aware that an investment in this fund can be accompanied by higher risk and volatility than stock funds invested in more developed regions.
However, the opportunity to invest in still-developing economies can also bring above-average growth over the long run. The Vanguard FTSE Emerging Markets ETF is targeted toward long-term investors. The Motley Fool's investing philosophy recommends building a diversified portfolio of 25 or more stocks you plan to hold for at least five years.
How to buy the Vanguard FTSE Emerging Markets ETF?
It's very easy to invest in the Vanguard FTSE Emerging Markets ETF. You can buy shares directly from Vanguard or in your regular brokerage account. Here's the step-by-step guide to buying shares of the VWO ETF.
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the ETF: Enter the ticker or ETF name into the search bar to bring up the ETF's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this ETF.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
The Vanguard FTSE Emerging Markets ETF is very well diversified across various emerging markets and sectors within these markets. As of late 2025, the ETF's weighted sector exposures were:
- Technology: 21.52%
- Financial Services: 21.47%
- Consumer Discretionary: 13.50%
- Communication Services: 9.60%
- Industrials: 7.91%
- Basic Materials: 7.30%
- Healthcare: 4.62%
- Consumer Defensive: 4.37%
- Energy: 4.20%
- Utilities: 2.97%
- Real Estate: 2.55%
Should I invest in the Vanguard FTSE Emerging Markets ETF?
Choosing any investment for your portfolio is a personal decision. You should make sure you understand your long-term investment goals and risk-tolerance level and have a general knowledge of investing in emerging markets before putting cash in the Vanguard FTSE Emerging Markets ETF.
That said, there are several reasons some long-term investors might want to consider a position in the VWO ETF. For investors who want to gain exposure to various emerging markets without taking on the risk of directly investing in individual companies, this ETF can provide an opportunity for immediate diversification while balancing your investment across numerous key regions.
Economic downturns can be global phenomena. However, having exposure to numerous markets both within and outside the U.S. can provide an opportunity to benefit from strength in certain regions when others are experiencing distress rather than being concentrated in a single sector or industry.
For investors with a healthy risk appetite, there can be significant upside to investing in emerging markets over the long run. These economies tend to experience greater leaps of growth than companies operating against fully developed economic landscapes.
According to the International Monetary Fund, emerging markets and developing economies will grow by 4.2% on average in 2025, compared to 1.8% for developed economies.
For investors who favor slower but steadier returns, investing in an ETF like the Vanguard FTSE Emerging Markets ETF may not be the most ideal option. Although emerging markets can present significant investment opportunities at relatively low valuations, you should also be aware of potential risks that are not as prevalent when investing in developed markets.
For example, political risk, economic risk, and currency dynamics can have a much greater impact on an emerging market investment than on a company operating in a well-developed economic environment.
Does the Vanguard FTSE Emerging Markets ETF pay a dividend?
The Vanguard FTSE Emerging Markets ETF paid a dividend that yielded roughly 2.85% as of late 2025, more than double the amount paid by the average dividend stock on the S&P 500.
What is the Vanguard FTSE Emerging Markets ETF's expense ratio?
The Vanguard FTSE Emerging Markets ETF has an expense ratio of 0.07%, which is extremely low compared to the average of around 0.5%. For a $10,000 investment in this ETF, the annual fee charged by the firm would come to around $7.
Historical performance of the Vanguard FTSE Emerging Markets ETF
The Vanguard FTSE Emerging Markets ETF is designed to closely track the return of the FTSE Emerging Markets All Cap China A Inclusion Index. Let's see how the fund has delivered on that objective over the trailing one-, three-, five-, and 10-year periods.
Return Period | 1-Year | 3-Year | 5-Year | 10-Year |
|---|---|---|---|---|
VWO (market price) | 18.81% | 11.46% | 6.31% | 7.12% |
VWO (NAV) | 17.97% | 11.16% | 6.17% | 7.02% |
Benchmark | 16.78% | 11.07% | 6.34% | 7.09% |
As the table demonstrates, the fund's returns have roughly matched those of the index it is structured to track.
Related investing options
The bottom line
The Vanguard FTSE Emerging Markets ETF is a leading ETF containing stocks of companies in emerging markets worldwide, such as China, Brazil, Taiwan, and South Africa. It is designed for long-term investors and features a collection of large-cap, mid-cap, and small-cap companies across these and other countries with emerging economies.
For investors with the risk appetite to put cash into these regions, the diversification opportunity the VWO ETF presents, its ultra-low expense ratio, and its healthy dividend could provide a top option for long-term investors to put cash into the future of emerging economies.
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