State Street SPDR Portfolio Emerging Markets ETF

SPEM

Market cap $16.9B

As U.S. fund outflows hit a 16-year high and volatility spikes, emerging market ETFs offer a path to diversification and growth.

State Street SPDR Portfolio Emerging Markets ETF remains a buy, supported by strong technicals, low valuation, and robust global equity momentum. SPEM offers broad EM exposure, a low 0.07% expense ratio, and a 2.58% dividend yield, with $16.7 billion AUM and high liquidity. The portfolio is large-cap and growth-heavy, with 23% in Taiwan (notably TSM at 11%), 30% in China, and 18% in India, creating concentration risk.

SPEM has delivered a 32% gain over the past year, outpacing the S&P 500's 16% return by a wide margin.

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.

As concerns over Fed independence, credit card rate caps and international conflicts weigh on U.S. markets, emerging market ETFs offer a path to diversification and growth.

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.

SPDR Portfolio Emerging Markets ETF tracks the S&P Emerging BMI Index, emphasizing China, Taiwan, and India, with a 0.07% fee. SPEM offers broad exposure with over 3,000 holdings, a 2.5% dividend yield, and trades at 15x earnings and 2x book value. The ETF is overweight dominant Asian emerging markets by about 10 percentage points versus the MSCI EM Index.

Getting emerging market exposure is a viable option in the current market environment. That's especially so given the global de-dollarization and prospect of further rate cuts by the Federal Reserve.

Emerging markets like China and Brazil show strong relative strength and attractive valuations, making SPEM a compelling buy for 2025. SPEM offers broad, low-cost exposure to large-cap, growth-oriented emerging market equities, with a 2.54% yield and low volatility. Despite seasonally weak months ahead, SPEM's technical momentum is robust, with shares breaking above key resistance and approaching all-time highs.