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This ETF Is a "Core" Play on Emerging Markets

We are avoiding broad-based international fund allocations until we get an all clear. The one exception here is in our Aggressive Portfolio where an allocation to emerging markets is recommended, as that segment has its own positive drivers working in its favor, explains Jim Woods, ETF expert and editor of Successful Investing.

iShares Core MSCI Emerging Markets ETF (IEMG), this segment had a big run higher in 2017. Yet in 2018, the slaughter was on, and stocks in the segment got beaten to a bearish pulp.

More from Jim Woods: A Low-Volatility Play for Defensive Investors

Yet since the beginning of the year, IEMG has surged, coming well off the late-October lows and moving briskly through the 50-day moving average. And, just this morning, the stock is knocking on the door of the 200-day moving average to give a very bullish omen for its future prospects.

That move has been on a combination of positives, including the aforementioned Chinese stimulus news, a cessation of the rise in the value of the U.S. dollar vs. rival foreign currencies, and the value proposition that emerging markets represent relative to both developed international markets and domestic markets.

As for the details of IEMG, the fund seeks to track the investment results of an index composed of large-, mid- and small-capitalization emerging-markets equities. So, you get a cross section of the emerging market space.

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The fund has some 1,847 holdings spread throughout 12 regions. The largest exposure is to emerging markets in China (28.7%), South Korea (14.3%) and Taiwan (12.2%).

Top holdings in the fund include some high-profile tech names like Tencent Holdings (TCEHY), Alibaba (BABA), Taiwan Semiconductor (TSM) and Samsung.

The fund also is very cost efficient, with an expense ratio of just 0.14%, and a 30-day SEC yield of 2.4%. If you’re an Aggressive Portfolio investor, then I recommend buying iShares Core MSCI Emerging Markets ETF.

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