Is iShares Emerging Markets Equity Factor ETF (EMGF) a Strong ETF Right Now?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
The fund is managed by Blackrock, and has been able to amass over $887.40 million, which makes it one of the larger ETFs in the Broad Emerging Market ETFs. This particular fund, before fees and expenses, seeks to match the performance of the MSCI Emerging Markets Diversified Multiple-Factor Index.
The STOXX Emerging Markets Equity Factor Index (USD) composes of stocks of large and mid-capitalization companies in emerging markets that have favourable exposure to target style factors subject to constraints.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.26%, making it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 3.50%.
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Taking into account individual holdings, Taiwan Semiconductor Manufacturing accounts for about 8.61% of the fund's total assets, followed by Tencent Holdings Ltd and Alibaba Group Holding Ltd.
EMGF's top 10 holdings account for about 25.23% of its total assets under management.
The ETF has gained about 14.17% so far this year and was up about 14.25% in the last one year (as of 06/17/2025). In the past 52-week period, it has traded between $41.37 and $51.83.
The fund has a beta of 0.59 and standard deviation of 16.34% for the trailing three-year period. With about 611 holdings, it effectively diversifies company-specific risk.
IShares Emerging Markets Equity Factor ETF is a reasonable option for investors seeking to outperform the Broad Emerging Market ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard FTSE Emerging Markets ETF (VWO) tracks FTSE Emerging Markets All Cap China A Inclusion Index and the iShares Core MSCI Emerging Markets ETF (IEMG) tracks MSCI Emerging Markets Investable Market Index. Vanguard FTSE Emerging Markets ETF has $88.55 billion in assets, iShares Core MSCI Emerging Markets ETF has $90.54 billion. VWO has an expense ratio of 0.07% and IEMG charges 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Emerging Market ETFs.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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iShares Emerging Markets Equity Factor ETF (EMGF): ETF Research Reports
iShares Core MSCI Emerging Markets ETF (IEMG): ETF Research Reports
Vanguard FTSE Emerging Markets ETF (VWO): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
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