While many investors reach for a broad EAFE fund to capture developed‑world exposure, the real excitement lies in the younger, faster‑growing sibling: emerging markets.
A Straightforward Way to Capture Global Growth
Long‑term core positions often sit in ETFs such as Vanguard’s VWO or iShares’ EEM. If you already own EEM, consider swapping to the lower‑cost, larger‑cap IEMG, which holds roughly five times the assets.
Over the past twelve months, IEMG has delivered a 44% return, dwarfing the S&P 500’s 16% gain. The fund’s $145 billion market‑cap has not only outperformed but also shown resilience during the brief 2025 market dip.
Technical analysis indicates that IEMG recently reclaimed its early‑2021 peak near $70 after falling to $41 during the 2022 bear market. Using a measured‑move approach, the $28 price swing from that trough to the breakout point suggests a potential target around $98. Even a more conservative 1.618 Fibonacci extension points to $87‑$88, implying ample upside remaining.
Seasonality: A Short‑Term Pause?
For those who favor EEM because of its longer price history, the StockCharts seasonality tool shows a solid 10% year‑to‑date gain—one of the best starts since 2007. However, the mid‑February through mid‑March window has historically been a weak stretch, delivering the second‑worst performance of any two‑month period over the last two decades.
Despite the historical dip, February this year has already bucked the trend, posting a modest gain. If the market holds steady, the period from St. Patrick’s Day through April could become the most bullish window for EM ETFs.
Country Leaders Power the Rally
Among the 41 countries tracked on StockCharts’ International Country ETF heat map, only four have slipped into negative territory in 2026. Stand‑out performers include South Korea (EWY), Peru (EPU), and Brazil (EWZ), each posting robust gains after years of stagnation.
Is the Dollar Driving the Move?
Critics often blame a weaker U.S. dollar for EM’s rally. While the dollar is down roughly 10% year‑over‑year, that accounts for only a slice of IEMG’s 44% gain. Over the past six months, the dollar has been relatively flat, yet IEMG still posted a 25% rise. Over six years, a stagnant dollar coincided with a 68% surge in IEMG, suggesting other fundamentals are at play.
Risks to Watch
Potential headwinds include a rapid rise in U.S. interest rates, a breakout of the dollar above 100.50, falling commodity prices that could hurt South American exposure, and renewed tariff pressures on Asian economies. Monitoring these macro variables alongside price action is essential.
Bottom Line
Emerging market ETFs, especially IEMG, have reclaimed a leading position in global equity performance. Technical indicators point to further upside, even as short‑term seasonal risks linger. Keep an eye on interest‑rate trends, currency dynamics, and commodity flows—otherwise, the sky looks clear for EM exposure.
Disclaimer: This article is for educational purposes only and does not constitute financial advice. Consult a professional before making investment decisions.
Source: Materials provided by https://articles.stockcharts.com.Note: Content may be edited for style and length.