Freedom 100 Emerging Markets ETF

FRDM

Market cap $1.7B

Freedom ETFs' FRDM ETF targets emerging markets with high economic freedom, offering a differentiated approach to EM investing. FRDM invests in countries with compelling valuations and strong growth prospects, often outpacing the broader MSCI Emerging Markets index. The ETF avoids state-owned enterprises (SOEs) and focuses on governance, liquidity, and country-specific risks to enhance long-term returns.

The on-again-off-again trade war between the U.S. and China is enough to keep investors guessing. Some investors are avoiding China stocks.

FRDM ETF has outperformed major emerging market benchmarks due to strategic overweights in Poland, Chile, Korea, and tech, while avoiding China and India. The fund's low valuation (12.4x earnings, PEG 1.3x) and strong technicals support its recent alpha, but liquidity is a concern with a wide bid/ask spread. Despite stellar momentum and a bullish long-term trend, bearish RSI divergence and seasonal weakness suggest caution in the near term.

Financial technology (fintech), broadly speaking, allows the remote delivery of financial services to businesses and individuals through computers or mobile devices. Fintech encompasses everything from smartphone apps to complex blockchain-enabled networks that facilitate financial transactions.

FRDM ETF offers unique diversification by focusing on emerging markets ranked by freedom, reducing political risks and lowering correlation with US markets. The fund excludes authoritarian regimes like China, prioritizing transparency and freedom, which has improved returns and drawdown management versus traditional EM ETFs. FRDM's sector and country allocations—favoring Taiwan, South Korea, and Chile—capitalize on macro resilience and global tech trends, despite omitting China and underweight India.

The Freedom 100 Emerging Markets ETF uses a "freedom-weighted" strategy to outperform traditional market-weighted EM funds by excluding regimes like China and Russia. FRDM's methodology filters 24 emerging market countries based on liquidity, market cap, and freedom scores, resulting in a diversified portfolio of around 100 stocks. The fund's higher volatility is offset by its positive upside and downside capture, making it suitable for aggressive investors seeking targeted EM exposure.

Investors may want to reduce their exposure to the world's largest emerging market.

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