When U.S. investors use exchange-traded funds (ETFs) to invest internationally, they generally have three choices. They can go broad with an ex-U.S. fund spanning most foreign equities, or refine their allocation by separating developed and emerging markets.
Developed markets generally consist of mature economies with high incomes, established financial markets, strong regulatory institutions and relatively liquid securities markets. Countries such as Japan, the U.K., Canada, France and Australia typically fall into this category.
Emerging markets, by comparison, generally have lower incomes and less mature financial systems but potentially faster economic and demographic growth. “The term ’emerging markets’ refers to countries that are in the middle stage of their development, only recently industrialized or just opened their markets up to foreign investment,” explains Brendan Ahern, chief investment officer at KraneShares. “The largest examples include China, India and Brazil.”
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The dividing line is less clear-cut than investors might expect. Ultimately, classifications depend on the methodology of individual index providers, which consider factors ranging from economic development to market accessibility and liquidity. South Korea is a prominent example: MSCI continues to classify it as an emerging market, while FTSE Russell treats it as developed.
That disagreement produces meaningful differences between otherwise similar emerging-market ETFs. The iShares Core MSCI Emerging Markets ETF (ticker: IEMG), for example, has 20% of its portfolio invested in South Korean stocks. The Vanguard FTSE Emerging Markets ETF (VWO), which follows FTSE’s classification system, has no comparable South Korean allocation.
That distinction has mattered considerably for recent performance. For the year ended July 31, IEMG returned 32% on a total-return basis versus 21% for VWO. Major contributors to IEMG’s outperformance were Korean memory-chip giants Samsung Electronics Co. (OTC: SSNLF) and SK hynix Inc. (SKHY), both beneficiaries of strong artificial intelligence demand.
For passive ETF investors, the lesson is to look beyond the “emerging markets” label and understand exactly how the underlying index defines its universe. Two ETFs ostensibly targeting the same asset class can end up with materially different country and company exposures. On the other hand, actively managed emerging-market ETFs can give portfolio managers greater discretion over those decisions, although that flexibility typically comes with higher fees.
Here are seven of the best emerging-market ETFs to buy for 2026:
| ETF | Expense Ratio |
| State Street SPDR Portfolio Emerging Markets ETF (SPEM) | 0.07% |
| Vanguard Emerging Markets ex-China ETF (VEXC) | 0.07% |
| iShares MSCI BIC ETF (BKF) | 0.72% |
| iShares MSCI South Africa ETF (EZA) | 0.59% |
| Freedom 100 Emerging Markets ETF (FRDM) | 0.49% |
| KraneShares CSI China Internet ETF (KWEB) | 0.69% |
| KraneShares China Technology & Semiconductor STAR 50 Index ETF (KSTR) | 0.65% |
State Street SPDR Portfolio Emerging Markets ETF (SPEM)
“With more than $17 billion in assets, almost 3,000 holdings, and a 0.07% expense ratio, SPEM provides broad, low-cost exposure across the emerging-market opportunity set,” says Matthew Bartolini, managing director and global head of research strategists at State Street Investment Management. This ETF tracks the S&P Emerging BMI Index and has a track record dating back to March 2007.
“Second-quarter earnings growth has been particularly strong, demonstrating that many emerging-market companies are delivering on the favorable economic backdrop,” Bartolini explains. “At the same time, valuations remain below historical averages and at a discount to many developed markets, providing investors a potentially attractive entry point.” SPEM has returned 10.4% year to date.
Vanguard Emerging Markets ex-China ETF (VEXC)
“Vanguard believes investors should have access to a range of investment options that reflect their individual goals and preferences,” explains Kathy Kellert, head of index equity product at Vanguard. “VEXC is designed for investors seeking broadly diversified emerging-markets exposure while avoiding risks that are specific to China, including unique regulatory, political and geopolitical considerations.”
China-specific risks can include trade disputes and sanctions, potential U.S. exchange de-listings, state influence over major enterprises and regulatory uncertainty surrounding variable interest entity structures. VEXC essentially provides VWO-like emerging-market exposure without China, resulting in larger allocations to markets such as Taiwan and India. The ETF charges a low 0.07% expense ratio.
iShares MSCI BIC ETF (BKF)
BRICS originally stood for Brazil, Russia, India, China and South Africa, although the bloc has since expanded to include additional emerging economies via BRICS+. Not all of these markets are readily available for U.S. investors, most notably Russia following sanctions and the subsequent liquidation of Russia-focused ETFs. BKF captures three of the original BRICS markets by tracking the MSCI BIC Index.
The ETF holds 706 stocks across China, India and Brazil. China dominates at roughly 57% of the portfolio, followed by India at 32% and Brazil at 10%. However, the ETF is relatively expensive at a 0.72% expense ratio and less liquid, with a 0.24% 30-day median bid-ask spread. BKF has also struggled to attract inflows with just $74 million in assets despite launching almost two decades ago in November 2007.
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iShares MSCI South Africa ETF (EZA)
BKF omits two of the original BRICS members: Russia and South Africa. While the former remains effectively uninvestable for U.S. ETF investors due to sanctions, South Africa remains accessible through EZA, which charges a 0.59% expense ratio. Launched in February 2003, the ETF has since accumulated over $500 million in assets and has returned 27.5% over the trailing one-year period.
EZA tracks the MSCI South Africa 25/50 Index with a concentrated portfolio of just 27 holdings. Its sector weights reflect South Africa’s economy, with roughly 39% in materials and 34% in financials, while providing an above-average 2.8% 30-day SEC yield. Costs are less competitive, however, with the 0.59% expense ratio accompanied by a relatively wide 0.16% 30-day median bid-ask spread.
Freedom 100 Emerging Markets ETF (FRDM)
“When selecting emerging-market ETFs, you should consider whether you want broad exposure to multiple developing economies around the globe, or a focus on a specific country,” says Michael Ashley Schulman, partner at Cerity Partners. From there, investors can add additional screens to potentially outperform. A notable example is FRDM, which has delivered a high 17.2% five-year total return.
Instead of weighting emerging-market stocks by market capitalization, FRDM emphasizes countries scoring highly on measures of personal and economic freedom. That produces a portfolio substantially different from conventional emerging-market benchmarks, with China and India entirely absent. Instead, Taiwan and South Korea together account for just over 50% of the portfolio.
KraneShares CSI China Internet ETF (KWEB)
Some emerging-market ETFs are niche in both country and sector, with KWEB being a good example. The ETF tracks the CSI Overseas China Internet Index, with major holdings including Alibaba Group Holding Ltd. (BABA), Tencent Holdings Ltd. (OTC: TCEHY) and PDD Holdings Inc. (PDD). While KWEB was historically associated with China’s e-commerce boom, the investment case has expanded toward AI.
“The AI opportunity is becoming an increasingly important part of the KWEB story,” says Cole Wenner, investment strategist at KraneShares. “For example, Alibaba is developing its Qwen large language model, and Tencent is advancing AI applications through WorkBuddy, an AI-native desktop agent designed to execute workflows from a single text prompt.” KWEB charges a 0.69% expense ratio.
KraneShares China Technology & Semiconductor STAR 50 Index ETF (KSTR)
KSTR provides exposure to China’s STAR Market, the Shanghai Stock Exchange’s science-and-technology-focused board. The ETF owns 50 companies involved in chip design, wafer-fabrication equipment, semiconductor materials, memory and high-performance computing. The STAR Market has become a premier listing venue for China’s high-tech unicorn startups.
“ChangXin Memory Technologies (SHA: 688825) or CMXT, China’s leading DRAM memory-chip producer, completed a major STAR Market IPO in July 2026 and is now held in KSTR,” Wenner says. “Meanwhile, humanoid-robotics company Unitree has progressed through the STAR Market listing process, highlighting the exchange’s role in bringing fast-growing companies to public investors.”
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7 Best Emerging-Market ETFs to Buy for 2026 originally appeared on usnews.com
Update 08/18/26: This story was published at an earlier date and has been updated with new information.
