Is iShares MSCI Emerging Markets Multifactor ETF (EMGF) a Strong ETF Right Now?
Smart Beta ETF report for EMGF
The iShares MSCI Emerging Markets Multifactor 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?For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.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.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.Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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 & IndexThe fund is sponsored by Blackrock. It has amassed assets over $751.19 million, making it one of the larger ETFs in the Broad Emerging Market ETFs. Before fees and expenses, EMGF seeks to match the performance of the MSCI Emerging Markets Diversified Multiple-Factor Index.The MSCI Emerging Market 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 ExpensesWhen considering an ETF's total return, expense ratios are an important factor.
And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.Operating expenses on an annual basis are 0.25% for EMGF, making it one of the cheaper products in the space.EMGF's 12-month trailing dividend yield is 4.15%.Sector Exposure and Top HoldingsETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.Looking at individual holdings, Taiwan Semiconductor Manufacturing accounts for about 4.57% of total assets, followed by China Construction Bank Corp H and Kia Corporation Corp.Performance and RiskYear-to-date, the iShares MSCI Emerging Markets Multifactor ETF has lost about -18.13% so far, and is down about -17% over the last 12 months (as of 12/26/2022). EMGF has traded between $38.04 and $52.73 in this past 52-week period.EMGF has a beta of 0.72 and standard deviation of 23.88% for the trailing three-year period.
With about 310 holdings, it effectively diversifies company-specific risk.AlternativesIShares 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 $63.02 billion in assets, Vanguard FTSE Emerging Markets ETF has $67.06 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 LineTo 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.