Making its debut on 12/08/2015, smart beta exchange traded fund iShares Emerging Markets Equity Factor ETF (EMGF) provides investors 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by Blackrock. It has amassed assets over $1.89 billion, making it one of the larger 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.
Operating expenses on an annual basis are 0.26% for this ETF, which makes it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 2.01%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Taiwan Semiconductor Manufacturingaccounts for about 10.29% of the fund's total assets, followed by Samsung Electronics Ltd and Tencent Holdings Ltd.
Its top 10 holdings account for approximately 30.23% of EMGF's total assets under management.
Performance and Risk
The ETF has added about 25.1% so far this year and was up about 40.77% in the last one year (as of 06/29/2026). In the past 52-week period, it has traded between $51.93 and $76.28
The fund has a beta of 0.70 and standard deviation of 18.42% for the trailing three-year period. With about 634 holdings, it effectively diversifies company-specific risk .
Alternatives
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 Emerging Markets Stock Index Fund ETF Shares (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 Emerging Markets Stock Index Fund ETF Shares has $119.51 billion in assets, iShares Core MSCI Emerging Markets ETF has $157.57 billion. VWO has an expense ratio of 0.06% and IEMG changes 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
Bottom Line
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iShares Emerging Markets Equity Factor ETF (EMGF): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).