Emerging market investing has been a major theme over the last decade or so, as developed economies settle into a more stable pattern and investors look elsewhere for growth in their portfolios. But defining an emerging market, as well as when a country transfers from frontier to emerging, or emerging to developed, has always been somewhat subjective. Though most analysts agree on which country falls into which category, there are examples of “border” nations like Taiwan and South Korea, which many argue are developed (we are inclined to agree).
To help put your emerging market exposure in perspective, we present a comparison of emerging markets by key metrics that help define a country’s progression and economic prowess. Note that we have added several developed economies (like the U.S. and Germany) as well as frontier markets to give investors a point of reference:
The Bottom Line
We often stress the importance of looking under the hood of your ETFs to make sure you fully understand the product. Part of this process will involve comprehending your country exposure, especially when it comes to emerging markets. Are you really investing in growing economies, or does your fund have a slant towards those that are watching growth taper? It is an important question to ask and answer to ensure that you are making the correct decision for your portfolio.
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Disclosure: No positions at time of writing.