MSCI World Emerging Markets: The Next Frontier for Investors

ETFs are a popular way to invest in the MSCI World Emerging Markets Index. In this article, we will discuss how to invest in this index using ETFs, including the fees, returns, and other factors to consider.

The MSCI world's emerging markets

What is the MSCI World Emerging Markets

The MSCI World Emerging Markets is a financial index used as a reference to measure the performance of emerging markets worldwide. It was created by MSCI Inc., a leading financial services company based in New York.

This index is composed of a wide range of emerging market companies and is widely used by investors and fund managers to evaluate the performance of their portfolios and make investment decisions.

What companies are part of the MSCI World Emerging Markets

The MSCI World Emerging Markets includes companies from various sectors and developing countries. Some of the best-known companies that are part of this index are:

  1. Taiwan Semiconductor Manufacturing (Ticker: TPE): It is a Taiwanese multinational manufacturing and design of semiconductors by contract.
  2. Alibaba Group Holding Ltd (Ticker: BABA): An e-commerce company based in China and one of the largest in the world.
  3. Samsung Electronics Co., Ltd (Ticker: 005930): A South Korean technology giant known for its line of electronic products, including smartphones and televisions.
  4. Tencent Holdings Limited (Ticker: 0700): A Chinese technology company that specializes in Internet services and entertainment, and is the owner of the popular messaging app WeChat.

These are just some of the many companies that are part of the MSCI World Emerging Markets. The index includes a wide diversity of industries and countries, reflecting the global and dynamic nature of emerging markets.

Sectoral Distribution

Investing in the MSCI World Emerging Markets through ETFs

Exchange Traded Funds (ETFs) are a popular way to invest in the MSCI World Emerging Markets. These exchange-traded funds replicate the index's performance and allow investors to access a diversified portfolio of emerging market companies without having to buy each of the individual stocks.

Investing in the MSCI World Emerging Markets through ETFs has several advantages. Firstly, it offers diversified exposure to emerging markets, reducing the risk associated with investing in a single company or sector. Additionally, ETFs typically have lower transaction costs than buying individual stocks and offer liquidity, as they can be bought and sold on the open market.

Costs of Investing in the MSCI World Emerging Markets

The costs associated with investing in the MSCI World Emerging Markets through ETFs can vary depending on the specific fund and provider. The main costs to consider are:

  1. TER (Total Expense Ratio): This is the total annual cost of managing and operating the ETF. It is expressed as a percentage of the total value of the fund's assets. TERs of ETFs are usually relatively low, generally between 0.1% and 0.8%.
  2. Brokerage fees: When buying or selling ETFs, intermediaries may charge transaction fees. These fees can vary depending on the intermediary and the type of account used.

It is important to take into account the total costs when evaluating the investment in the MSCI World Emerging Markets through ETFs, as they can affect the net return of the investment.

Pros and Cons of Investing in the MSCI World Emerging Markets

Pros of Investing in the MSCI World Emerging Markets

  1. Global diversification in emerging markets
  2. Potential for economic growth
  3. Access to leading companies in emerging markets
  4. Investment opportunities in growing sectors

Cons of Investing in the MSCI World Emerging Markets

  1. Greater volatility and risk
  2. Sensitivity to political and economic events
  3. Fluctuations in exchange rates
  4. Regulations and geopolitical risks

Investing in the MSCI World Emerging Markets offers the possibility of participating in the economic growth of emerging markets and accessing leading companies in these countries. However, it also involves risks associated with the volatility of emerging markets and sensitivity to political and economic factors. In addition, fluctuations in exchange rates and geopolitical risks can affect the return on investment.

Best ETFs indexed to the MSCI World Emerging Markets


Below is a table with three of the best ETFs indexed to the MSCI World Emerging Markets, along with their name, ticker, 3-year return (annualized), and TER (Total Expense Ratio):

NameTickerReturn.3aTER
iShares MSCI EM UCITS ETF (Acc)EUNM10.260.18
Amundi Index MSCI Emerging Markets UCITS ETF DR (C)10AF10.110.20
SPDR MSCI Emerging Markets UCITS ETFSPYM9.900.18

These ETFs offer investors exposure to the MSCI World Emerging Markets and are known for their low cost and diversification. It is important to do additional research and consult a financial advisor before making any investment decisions.

Alternatives to Investing in the MSCI World Emerging Markets

While investing in the MSCI World Emerging Markets through ETFs may be a popular option, there are other alternatives for investors looking to diversify their portfolio beyond emerging markets. Some of these alternatives include:

  1. Investing in ETFs or index funds that follow other developed market indices, such as the S&P 500 or the FTSE Developed All Cap Index.
  2. Exploring investment opportunities in specific sectors or themes, such as technology, health, or renewable energies.
  3. Considering investments in bonds and other fixed-income instruments to further diversify the portfolio and reduce risk.

Each alternative has its own characteristics and considerations, so it is important to evaluate individual investment objectives and consult with a financial advisor before making any investment decisions.

FAQs

What is the difference between the MSCI World and the MSCI Emerging Markets?

The MSCI World is an index that includes companies from developed markets, while the MSCI Emerging Markets focuses exclusively on companies from emerging markets. The MSCI World Emerging Markets combines both indices to offer exposure to a wide range of companies in both developed and emerging markets.

What is the geographical composition of the MSCI World Emerging Markets?

The geographical composition of the MSCI World Emerging Markets varies over time but usually includes countries such as China, South Korea, Taiwan, India, Brazil, South Africa, and many other developing countries.

What is the historical performance of the MSCI World Emerging Markets?

The historical performance of the MSCI World Emerging Markets can vary depending on market conditions. It is important to keep in mind that past performance does not guarantee future results and that emerging markets can be volatile compared to developed markets.

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