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Is iShares MSCI Emerging Markets Multifactor ETF (EMGF) a Strong ETF Right Now?

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The iShares MSCI Emerging Markets Multifactor ETF (EMGF - Free Report) made its debut on 12/08/2015, and is a smart beta exchange traded fund that provides broad exposure to the Broad Emerging Market ETFs category of the market.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

Managed by Blackrock, EMGF has amassed assets over $733 million, making it one of the larger ETFs in the Broad Emerging Market ETFs. EMGF seeks to match the performance of the MSCI Emerging Markets Diversified Multiple-Factor Index before fees and expenses.

The MSCI Emerging Markets Diversified Multiple Factor Index is composed of stocks of large and mid-capitalization companies in emerging markets that have favourable exposure to target style factors subject to constraints.

Cost & Other Expenses

For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.

Annual operating expenses for EMGF are 0.45%, which makes it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 1.72%.

Sector Exposure and Top Holdings

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.

When you look at individual holdings, Taiwan Semiconductor Manufacturing accounts for about 4.04% of the fund's total assets, followed by Tencent Holdings Ltd and Infosys Ltd (INFY - Free Report) .

The top 10 holdings account for about 28.22% of total assets under management.

Performance and Risk

Year-to-date, the iShares MSCI Emerging Markets Multifactor ETF has added roughly 5.46% so far, and it's up approximately 16.01% over the last 12 months (as of 10/11/2021). EMGF has traded between $43.76 and $55.13 in this past 52-week period.

The ETF has a beta of 0.80 and standard deviation of 23.37% for the trailing three-year period. With about 247 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares MSCI Emerging Markets Multifactor 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.

IShares Core MSCI Emerging Markets ETF (IEMG - Free Report) tracks MSCI Emerging Markets Investable Market Index and the Vanguard FTSE Emerging Markets ETF (VWO - Free Report) tracks FTSE Emerging Markets All Cap China A Inclusion Index. IShares Core MSCI Emerging Markets ETF has $79.23 billion in assets, Vanguard FTSE Emerging Markets ETF has $79.69 billion. IEMG has an expense ratio of 0.11% and VWO charges 0.10%.

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.

Bottom Line

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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