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ETF Specialist

An Emerging-Markets Trifecta

This ETF provides broad and low-cost exposure to an attractively valued market.

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IShares Core MSCI Emerging Markets (IEMG) offers broad exposure to large-, mid-, and small-cap companies across 23 emerging markets, including Taiwan and South Korea. Its rock-bottom fee and inclusion of small-cap companies set it apart from its peers in the diversified emerging-markets Morningstar Category. Its market-cap-weighting approach promotes low turnover but also creates significant exposure to individual country risk.

Despite the inclusion of 23 emerging markets, China (26%), South Korea (15%), and Taiwan (13%) jointly account for more than half of the portfolio, owing to their large relative size. The same three countries make up less than 40% of the typical actively managed fund in the category. MSCI, the firm behind the fund's index, is also considering adding China A-Shares, which would further increase the fund's allocation to Chinese stocks.

Matthew Diamond does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.