Capital flows into emerging markets reached a 21-month high in March, totaling $36.8 billion. This was the highest total since June 2014. While exchange-traded fund (ETF) iShares MSCI Emerging Markets (EEM) moved higher in August 2014, that was soon followed by a steady and lengthy decline. This isn’t to say emerging markets and emerging market ETFs are incapable of performing well in the near future. This is certainly possible in a world where central banks are driving markets more than fundamentals.

What really stands out about the emerging market capital inflows is that it has mostly been geared toward Asia, especially China. To say that investing in China right now could be high risk would be an understatement. According to the Institute of International Finance, the recent run in emerging markets might be temporary because it has related to a less dovish Federal Reserve, lower rates in mature markets and because emerging market valuations have now moved higher. According to the IMF, some emerging market countries could contend with financing gaps in the event of an economic crisis. (For more, see: ETF Flows: Emerging Markets Equity ETFs Winning Assets.)

It’s up to you to decide which way emerging markets will go next. There are more than two possibilities. They could move higher based on central bank support or move lower due to poor fundamentals. They could also move higher due to central bank support, followed by moving lower due to fundamentals and eventually moving higher again thanks to strengthening fundamentals and supportive demographic and consumer trends. The last possibility might the most likely, but it would take years to play out. A lot will depend on your investment time frame.

If you would like to simplify your investments in emerging markets, several popular liquid emerging market ETFs are listed below.

Popular Emerging Market ETFs

Vanguard FTSE Emerging Markets ETF (VWO) tracks the FTSE Emerging Markets All-Cap China A Transition Index, which gradually increases exposure to small-cap stocks and China A-shares while proportionately reducing exposure to other stocks based on their weighting in the index. VWO has net assets of $45.06 billion. With an average daily trading volume of 21 million, it’s highly liquid. The 0.15% expense ratio is also appealing. And a dividend yield of 3.48% is nothing to complain about. If you add appreciation of 7.24% over the past month, VWO looks event even more enticing. However, it has depreciated 18.53% over the past year. (For more, see: Top 3 Emerging Markets ETFs.)

iShares MSCI Emerging Markets (EEM) tracks the MSCI Emerging Markets Index, which is more diversified than VWO yet still has a lot of exposure to China. EEM has net assets of $18.31 billion and an average daily trading volume of 71 million. The expense ratio is considerably higher at 0.69%, which is a negative. The dividend yield isn’t as high at 2.65%. Appreciation of 7.32% over the past month is similar as is depreciation of 18.24% over the past year. If you’re seeking more diversification in emerging markets, then EEM will be a better option than VWO but not if you’re seeking lower costs and higher yield.

iShares Core MSCI Emerging Markets (IEMG) tracks the performance of the MSCI Emerging Markets Investable Market Index, which tracks large-cap, mid-cap, and small-cap stocks across global emerging markets. IEMG has net assets of $9.10 billion and an average daily trading volume of six million. The expense ratio of 0.18% is more than fair. The dividend yield is 2.70%. Appreciation is 7.12% over the past month, but IEMG has depreciated 17.43% over the past year. This is the best option for investors seeking emerging market diversification. (For more, see: The Largest Emerging Markets ETFs.)

If you want to short emerging markets then look into ProShares Short MSCI Emerging Markets (EUM), which tracks 1x the inverse performance of the MSCI Emerging Markets Index. EUM has net assets of $401.73 million and an average daily trading volume just shy of one million. As an inverse ETF, there is no yield and the expense ratio is high at 0.95%. EUM has depreciated 7.37% over the past month, but appreciated 11.05% over the past year.

The Bottom Line

Emerging markets have been performing well recently, but the Institute of International Finance and the IMF have concerns that this trend might not be sustainable. If you’re research tells you to be bullish on emerging markets, then you might want to consider one of the three ETF options above. If you’re research tells you to be concerned about emerging markets, the best option would likely be to do nothing. If you have an appetite for risk, then consider doing your due diligence on EUM. (For more, see: Emerging Market ETFs See Sixth Week of Inflows.)

Dan Moskowitz is long EUM. He has no positions in VWO, EEM or IEMG. 

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