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The term emerging market is commonly used to describe business and market activity in industrializing or emerging regions of the world. Originally brought into fashion in the 1980s by then World Bank economist Antoine van Agtmael, the term is sometimes loosely used as a replacement for emerging economies, but really signifies a business phenomenon that is not fully described by or constrained to geography or economic strength; such countries are considered to be in a transitional phase between developing and developed status.
The emerging markets include China, India, Mexico, Brazil, much of Southeast Asia, countries in Eastern Europe, parts of Africa and Latin America.
Many exchange traded funds (ETFs) give investors easy access to globalization. Emerging markets ETFs allow an investor to spread their dollars across a number of countries and currencies while getting exposure to some of the fastest-growing economies in the world.
- They provide diversification for your portfolio.
- Over the long-term, U.S. and foreign markets don't parallel each other.
- When emerging markets are up, they're UP. South Korea and Brazil are excellent examples of this, as they've been the top performing ETFs year-to-date.
- Your portfolio can tolerate investing in higher risk ETFs.
The following are few emerging markets ETFs around the world.
- iShares MSCI Emerging Markets Index Fund (EEM): The iShares MSCI Emerging Markets Index Fund seeks to provide investment results generally equivalent to publicly traded securities in emerging markets, as represented by the MSCI Emerging Markets Index.
- SPDR S&P Emerging Markets ETF (GMM): The SPDR S&P Emerging Markets ETF seeks to closely match the returns and characteristics of the total return performance of the S&P/Citigroup BMI Emerging Markets Index.
- BLDRS Emerging Markets 50 ADR Index ETF (ADRE): The BLDRS Emerging Markets 50 ADR Index Fund is a unit investment trust designed to provide investment results generally equivalent to the publicly-traded depositary receipts comprising The Bank of New York Emerging Markets 50 ADR Index.
- Vanguard Emerging Markets ETF (VWO): The Vanguard Emerging Markets ETF is an exchange-traded share class of Vanguard Emerging Markets Stock Index Fund, which employs a "passive management" - or indexing - investment approach by investing substantially all (normally about 95%), of its assets in the common stocks included in the MSCI Emerging Markets Index. The MSCI Emerging Markets Index is made up of common stocks of companies located in emerging markets around the world.
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