iShares MSCI Emerging Markets ETF

EEM

Market cap $30.9B

Emerging markets ETFs surged in May on AI-driven semiconductor gains, easing Middle East tensions and attractive valuations.

The UK's blue-chip index advanced on Tuesday, supported by gains in mining-related shares as base metal prices strengthened, while energy stocks came under pressure following a decline in crude oil. Broader sentiment was also influenced by geopolitical developments, including renewed expectations of progress in US–Iran talks.

Asian equities fell on Tuesday as doubts over a Middle East ceasefire weighed on risk appetite, offsetting optimism around artificial intelligence funding and potential listings. MSCI's Asia-Pacific index excluding Japan slipped 0.6% after a volatile open.

Share markets across Asia fell on Thursday after reports of fresh US military strikes on Iran and missile attacks linked to Kuwait unsettled investors and weakened optimism surrounding a possible peace agreement in the Middle East. Oil prices surged while Treasury yields climbed as investors reacted to escalating tensions and growing concerns over inflation ahead of key US economic data.

Asia's smaller companies have delivered stronger returns than the region's large-cap stocks over the past five years, while also offering lower volatility and broader sector exposure, according to HSBC Asset Management. The firm said Asia small-cap stocks outperformed their large-cap counterparts by nearly 3% annualised at the index level over the period.

The dollar hit a six-week high amid Iran deal uncertainty. ETFs tied to the dollar may gain, while gold and emerging markets could struggle.

EEM has beaten VWO by roughly 10% year-to-date in 2026, and the entire gap traces back to one geographic difference between their underlying indexes. MSCI classifies South Korea as emerging; FTSE classifies it as developed. That single definition gap means VWO holds zero Samsung and zero SK Hynix. Korea is up ~80% YTD on the AI memory shortage. Carrying that exposure inside EEM has dragged its return ahead of VWO all year.

Contrary to what some Trump officials believe, Europe remains critical to our defense and, indeed, to securing the Free World. Therefore, the sudden, unexpected cancellation of a U.S. Army armor brigade's deployment in Poland raises a deeply disturbing question: Is Washington retreating from Europe?

Emerging markets investing has a recurring frustration. You buy the asset class for diversification and growth, then find that a handful of state-owned banks, commodity giants, and speculative tech names dominate the index.

Emerging markets spent most of the last decade as the asset class everyone owned a little of and complained about a lot.