Freedom 100 Emerging Markets ETF

FRDM

Market cap $3.36B

The Freedom 100 Emerging Markets ETF targets EM equities with high civil, political, and economic freedom scores, avoiding autocracies and state-owned enterprises. FRDM's portfolio is tech-heavy, with 55% concentrated in South Korea and Taiwan, and the top 10 holdings comprising 57% of assets. FRDM offers a 0.49% expense ratio, quarterly distributions, and trades at a 25-30% valuation discount to global markets, but exhibits high volatility and tracking error.

Three funds dominate the emerging markets ex-China conversation right now, and each one has put meaningful daylight between itself and the S&P 500 so far this year.

Investing in emerging markets (EM) used to be synonymous with getting exposure to China. It's an ideal notion, given that it's the second largest economy and thus commands a heavy weight in standard EM benchmarks.

Freedom 100 Emerging Markets ETF (FRDM) employs a semi-quantitative, freedom-weighted selection strategy, resulting in a concentrated active portfolio with 79% active share versus MSCI EM. FRDM has outperformed top passive EM ETFs by at least 1.64x, driven by high exposure to semiconductors and exclusion of China and state-owned enterprises. The ETF's largest holdings are semiconductor stocks, creating both significant upside from sector momentum and heightened risk if the memory supercycle reverses.

The Freedom 100 Emerging Markets ETF leverages 'freedom-weighting' to select and allocate equities from 24 emerging market countries. FRDM excludes state-owned enterprises (over 20% state ownership) and prioritizes personal and economic freedom metrics in its portfolio construction. With $2.97 billion AUM and a 0.49% expense ratio, FRDM has outperformed the market since inception, even during recent U.S. market stagnation.

Emerging market ETFs are back in focus. Two of the ten largest U.S.-listed ETF inflow winners year-to-date are broad EM funds.

The Freedom 100 Emerging Markets ETF's return of 99% over the past five years is 5 times that of the iShares Emerging Markets ETF. Its strategy of excluding countries and companies with high exposure to personal, political, and economic risks gives it a high-quality tilt.

At the same time developed markets have been generating policy and macro noise, emerging markets have been quietly outperforming. The inextricable relationship between the direction of U.S. monetary policy and emerging market risk assets remains powerful, but this time the rally is not just about the Fed.

Emerging-market stocks have broadly crushed the U.S. equities market this year, in one of the biggest market surprises of 2025.

Emerging markets equity returns have been driven by extreme mega-cap concentration, with index breadth collapsing to historic lows and masking weakness across much of the opportunity set. This concentration has distorted relative results for active managers, particularly those constrained by diversification rules or broad benchmarks, as small-cap underperformance and index construction limit flexibility.