iShares Core MSCI Emerging Markets ETF

IEMG

Market cap $128B

The iShares Core MSCI Emerging Markets ETF (NYSEARCA:IEMG) delivered a 34% return over the past year, crushing the S&P 500's 18% gain and drawing billions in fresh capital.

Driven by a weak U.S. dollar (-10%), the iShares Core MSCI Emerging Markets ETF outperformed both the S&P 500 and Nasdaq-100 indexes last year (by 18.3% and 16.3%, respectively). The IEMG ETF offers high exposure to emerging markets, especially China and Taiwan, with a strong tilt toward AI-driven semiconductor companies. The fund trades at a 42% P/E discount as compared to the S&P 500 and a 61% discount on a price-to-book basis.

IEMG commands a much larger assets under management (AUM) base and offers broader exposure with more holdings than SCHE IEMG delivered higher 1-year and 5-year returns, but with a slightly deeper maximum drawdown over five years Both ETFs show similar sector allocations and top holdings, but IEMG carries a marginally higher expense ratio These 10 Stocks Could Mint the Next Wave of Millionaires ›

IEMG charges a slightly higher expense ratio than VWO, but remains competitively priced for broad emerging markets exposure. Recent one-year total returns favor IEMG, though VWO has experienced a smaller five-year maximum drawdown.

Emerging markets show strong momentum. With diversification flows rising, a weakening dollar and potential Fed cuts, here are the ETFs to tap the trend.

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.

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Stretched U.S. valuations and AI bubble fears have investors looking abroad and are driving interest in international equity and emerging market ETFs.

As bubble fears rise and volatility spikes, investors can turn to ETFs like RSP, GLD and IEMG to diversify and cut concentration risk.