Emerging markets have been the best performing equity asset class this year, returning about 33% year-to-date. And the conditions that have propelled emerging markets in 2025 are still largely in place to keep the rally going in 2026, according to some analysts.
Emerging market stocks come from developing economies around the world, some as large as China or Brazil, others as small as Peru or Vietnam. For the average investor not versed in the world economies and foreign companies, it can be challenging to identify which stocks, in which emerging markets are the best investments.
Fortunately, there are many exchange-traded funds (ETFs) that can tap into the best emerging markets stocks while providing diversification to balance out the risks. Here are 2 of the top emerging markets ETFs.
1. Hartford multifactor emerging markets ETF
The Hartford Multifactor Emerging Markets ETF (NYSEARCA:ROAM) has been one of the best performing and most consistent emerging markets ETFs. The ETF is up roughly 30% year-to-date and over the past five years in has posted an average annualized return of 10.2%, making it one of the best in class.
This ETF tracks the proprietary Hartford Multifactor Emerging Markets Equity Index. The index adheres to a rule-based methodology that seeks to address risks while offering exposure to return-enhancing factors.
The methodology is also implements screens around individual stocks, county of origin, sector, and currency to produce a diversified portfolio. In addition, it looks to invest in stocks with lower valuations than the MSCI Emerging Markets Index.
While it has slightly underperformed the MSCI Emerging Markets Index this year, it has better three, five, and 10-year annualized returns than the benchmark.
The ETF holds about 300 stocks with SK Hynix (South Korea), Samsung (South Korea), Taiwan Semiconductor (TSM), Industrial and Commercial Bank of China, and China Hongqiao Group the top five holdings.
Roughly 22% of the holdings are from China, followed by 18% from India, 15% from Taiwan, 11% from South Korea, and 5% each from Brazil and Saudi Arabia.
2. Schwab fundamental emerging markets equity ETF
The Schwab Fundamental Emerging Markets Equity ETF (NYSEARCA:FNDE) is another top performing emerging markets ETF, both over the short and longer terms.
The ETF has a 27% return year-to-date and over the past five years it has posted an average annualized return of 10.1%. Only two other ETFs, including the aforementioned Hartford ETF, have better five year returns.
This ETF tracks the RAFI Fundamental High Liquidity Emerging Markets Index, which consists of large cap emerging markets stocks that are weighted by fundamental metrics, not cap size. The metrics are sales, operating cash flow, dividends and repurchases, and book value. It also includes specific liquidity screens to ensure that the companies are well-capitalized and stable. It also automatically rebalances when valuations rise past certain levels to ensure it is always buying low and selling high.
The ETF currently holds about 368 stocks with Taiwan Semiconductor, Alibaba (China), Hon Hai Precision Industry (Taiwan), Vale S.A. (Brazil) and China Construction Bank (China) making up the five largest holdings.
Approximately 38% of the portfolio consists of stocks from China followed by 18% from Taiwan, 11% from Brazil, 10% from India, and 5% from South Africa.
This ETF also has better three, five and 10-year returns than the MSCI Emerging Markets Index.
Source: https://www.fxstreet.com/news/the-top-two-emerging-markets-etfs-202512170531
