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Will Emerging Market ETFs Survive the Coronavirus Outbreak?

The world is grappling with the coronavirus threat that has so far claimed at least 132 lives in China along with around 5974 confirmed registered cases. The latest country to lodge a coronavirus case is the United Arab Emirates. Globally, reports from Thailand, Japan, Malaysia, South Korea, France, the United States, Singapore, Australia, Vietnam, Nepal and Sri Lanka confirm cases of this deadly virus (read: Global Low-Volatility ETFs for Turbulent Times).

Rapidly spreading coronavirus cases are fanning the fears of a slowdown in global economic growth and demand. Consequently, the MSCI Emerging Market Index already dipped 3.9% over the past week.

Meanwhile, the signing of the Sino-US trade deal earlier in January had improved the global economic outlook for 2020. However, per Ari Wald, senior technical analyst at Oppenheimer, the current downturn in the emerging markets can be a good investment opportunity. Moreover, analysts from various research houses, namely Morningstar and Charles Schwab found that stocks may suffer such disease-related outbreaks only on a short span. They tend to rebound over the following months. In fact, per a Morningstar research, none of the stocks under their coverage took a long-term beating from the 2003 SARS epidemic.

Nonetheless, the timing of the aggravated coronavirus outbreak seems to escalate the concerns. China’s economy witnessed the slowest pace of expansionin nearly three decades during 2019. Per a Wall Street Journal article, if the coronavirus spread is not contained and stabilized by March, China’s first-quarter growth could slide to below 6%. Given how interconnected the world’s second-largest economy is with the global economy, this economic sluggishness can stray into the emerging and developed economies, sparking greater ramifications (read: Can China ETFs Survive the Coronavirus Onslaught?).

Emerging Market ETFs in Focus

Below we highlight a few emerging market ETFs that can be considered by investors:

Vanguard FTSE Emerging Markets ETF VWO

The fund tracks the FTSE Emerging Markets All Cap China A Inclusion Index. It invests in stocks of companies located in the emerging markets around the world, such as China, Brazil, Taiwan and South Africa. The fund has a basket of 5,083 holdings and an AUM of $65.98 billion. It has an expense ratio of 12 basis points (read: Is It the Right Time to Try Riskier ETFs?).

iShares Core MSCI Emerging Markets ETF IEMG

This fund tracks the MSCI Emerging Markets Investable Market Index. It provides exposure to a broad range of emerging market companies. The fund carries a basket of 2,483 holdings. It has an expense ratio of 14 basis points and an AUM of $61.80 billion (read: 10 ETFs That Have Been Investors' Favorites).

iShares MSCI Emerging Markets ETF EEM

The fund tracks the MSCI Emerging Markets Index. It provides exposure to large and mid-sized companies in the emerging markets. The fund covers a basket of 1,223 holdings. It has an expense ratio of 68 basis points and an AUM of $29.75 billion (read: Turkey ETF Rallying Hard: How Long Will the Trend Last?).

Schwab Emerging Markets Equity ETF SCHE

The fund tracks as closely as possible, before fees and expenses, the total return of the FTSE Emerging Index and provides exposure to large and mid-cap companies in the emerging countries. The fund has a basket of 1,355 holdings. It has an expense ratio of 13 basis points and an AUM of $6.75 billion.

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Schwab Emerging Markets Equity ETF (SCHE): ETF Research Reports
 
iShares MSCI Emerging Markets ETF (EEM): ETF Research Reports
 
Vanguard FTSE Emerging Markets ETF (VWO): ETF Research Reports
 
iShares Core MSCI Emerging Markets ETF (IEMG): ETF Research Reports
 
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Zacks Investment Research
 
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