The 3 best emerging markets ETFs to build a global portfolio

Expanding the boundaries of your investment portfolio can be a crucial step in seeking growth and diversification opportunities.
In this article, we will explore the vast and dynamic universe of emerging markets to discover the 2 best Exchange-Traded Funds (ETFs) that.
they can help build a diversified portfolio in these fast-growing economies.
PIMCO Emerging Markets Advantage Local Bond Index UCITS ETF Acc Overall Rating: ★★★★☆ (4/5 stars) The PIMCO Emerging Markets Advantage Local Bond Index UCITS ETF Acc offers a solid opportunity for investors looking for a exposure to emerging markets through local currency denominated bonds.
This product stands out for its notable size and relatively low cost, making it attractive to those seeking efficient exposure to emerging markets.
With a total expense ratio (TER) of 0.61% per year, this ETF is one of the cheapest in its segment, which is good for investors looking to maximize their net returns.
Over the past 5 years, the ETF has returned +18.92%, reflecting the resilience and stability of its approach to investing in emerging market local currency-denominated bonds.
This ETF uses an accumulation policy, meaning that the returns generated are reinvested in the fund, contributing to compound capital growth over time.
With assets of approximately €220 million, this ETF offers adequate liquidity and reduces the risk of price dispersion.
This ETF does not offer currency hedging, which means investors are exposed to currency risk.
This may cause yields to fluctuate based on movements in emerging market currencies.
With a 1-year volatility of 8.02%, this ETF may not be suitable for investors with a low risk tolerance.
Emerging markets can be volatile, and this ETF reflects those fluctuations.
The PIMCO Emerging Markets Advantage Local Bond Index UCITS ETF Acc is a solid choice for investors looking to gain exposure to emerging markets through local currency-denominated bonds.
Its low costs, solid long-term performance and accumulation policy make it an attractive option for those seeking long-term capital growth.
However, investors should be aware of the currency risk and volatility associated with emerging markets.
It is advisable to consult a financial advisor before making an investment decision on this product.
read also The best climate change ETFs 2023 UBS ETF (LU) JP Morgan EM Multi-FactorEnhanced Local Currency Bond UCITS ETF (USD) A-dis Overall rating: ★★★★☆ (4/5 stars) The UBS ETF ( LU) JP Morgan EM Multi-FactorEnhanced Local Currency Bond UCITS ETF is a passively managed investment fund aimed at replicating the performance of the JP Morgan Emerging Markets Multi-FactorEnhanced Local Currency Bond index.
This ETF offers an attractive way to invest in emerging markets through local currency denominated bonds, seeking to generate incremental returns.
However, as with any investment, there are pros and cons to consider.
1.
This ETF has a well-defined objective: to replicate the JP Morgan Emerging Markets Multi-FactorEnhanced Local Currency Bond Index.
This index is designed to capture incremental returns through investment in emerging market local currency-denominated bonds, with a focus on short-term (1-5 years) US dollar-denominated bonds.
2.
Low management costs: With a total expense ratio (TER) of 0.47% per year, the ETF is cost competitive, which can increase net returns for investors.
3.
Replication Strategy: The ETF uses a sampling-based replication strategy, investing only in the most relevant components of the underlying index.
This does not minimize the risk of deviation from the reference index.
4.
Distribution policy: The interest generated is distributed to investors in the form of a coupon, every six months.
This can be attractive to investors looking for a regular income stream.
1.
Small fund size: The ETF has relatively small assets under management, equal to 48 million euros.
The size of the fund can affect liquidity.
2.
Exposure to currency risk: The ETF does not offer currency hedging, so investors are exposed to currency risk.
This may result in fluctuations in returns due to fluctuations in emerging market currencies.
3.
Volatility: The 1-year volatility of 8.32% may not be suitable for investors with low risk tolerance.
Emerging markets can be notorious for their volatility.
Bottom line The UBS ETF (LU) JP Morgan EM Multi-FactorEnhanced Local Currency Bond UCITS ETF offers an attractive opportunity for investors seeking exposure to emerging markets through local currency denominated bonds.
The well-defined strategy, competitive costs and regular distribution policy make it attractive for many investors.
However, it is important to consider the currency risk and volatility associated with emerging markets.
Additionally, the relatively small fund size may lead to liquidity limitations.
The UBS ETF focuses on emerging market local currency denominated bonds and uses a multi-factor strategy.
The PIMCO Emerging Markets Advantage Local Bond Index UCITS ETF Acc, on the other hand, is the cheaper and larger option among the 2 and is focused on local currency-denominated bonds from emerging markets.
Choosing between these ETFs will depend on your investment preferences, ESG strategies and your portfolio objective.
read also The best ETFs for investing in e-commerce Disclaimer The information and considerations contained in this article should not be used as the sole and main support on which to make investment decisions.
The reader maintains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk appetite and his time horizon.
The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation for public savings.