Back to top

Image: Bigstock

Is iShares Emerging Markets Equity Factor ETF (EMGF) a Strong ETF Right Now?

Read MoreHide Full Article

The iShares Emerging Markets Equity Factor ETF (EMGF - Free Report) was launched on 12/08/2015, and is a smart beta exchange traded fund designed to offer 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.

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

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.

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.

Fund Sponsor & Index

EMGF is managed by Blackrock, and this fund has amassed over $548.24 million, which makes it one of the average sized ETFs in the Broad Emerging Market ETFs. EMGF, 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.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

With one of the cheaper products in the space, this ETF has annual operating expenses of 0.25%.

The fund has a 12-month trailing dividend yield of 6.08%.

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 6.09% of the fund's total assets, followed by Samsung Electronics Ltd and Tencent Holdings Ltd.

The top 10 holdings account for about 22.82% of total assets under management.

Performance and Risk

The ETF has lost about -2.29% so far this year and is up about 1.93% in the last one year (as of 01/31/2024). In the past 52-week period, it has traded between $39.46 and $44.04.

The fund has a beta of 0.75 and standard deviation of 16.92% for the trailing three-year period. With about 671 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.

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 $71.92 billion in assets, Vanguard FTSE Emerging Markets ETF has $72.14 billion. IEMG has an expense ratio of 0.09% and VWO charges 0.08%.

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.

Published in