Since then, as the tables have turned in regards to the expected taper date, EEM has rallied more than 21 percent versus a 12 percent gain in SPY, which tracks the S&P 500.
A falling U.S. dollar, sitting at an eight-month low, has also breathed new life into emerging market funds, which directly benefit from dollar weakness.
What do you get when you buy EEM? The ETF is heavily tilted toward large, export-oriented multinational firms headquartered in emerging markets. Its top country position is South Korea, and its top single holding is Samsung Electronics (3.92%).
EEM top countries:
- South Korea: 15.8%
- China: 13.1%
- Brazil: 11.7%
- Taiwan: 11.4%
Among emerging markets, some country-specific funds have far outperformed the broad-based EEM.
Best performing emerging market ETFs since June 24 bottom:
- Greece (GREK): 63.8%
- Egypt (EGPT): 49.2%
- South Korea (EWY): 33.0%
- China (GXC): 29.5%
- South Africa (EZA): 28.5%
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If you're looking to invest in emerging markets, the Vanguard FTSE Emerging Markets ETF (VWO) is a cost-effective option with an expensive ratio of only 0.18 percent—about one fourth of EEM's 0.69 percent ratio. The main difference between the two funds is that, as of June 2013, VWO does not include exposure to South Korea, which (as shown above) accounts for the largest portion of EEM and has seen some of the best returns since EEM bottomed late June.
Since dumping South Korea on June 28, 2013, VWO has gained 11 percent, underperforming EEM, which is up 14 percent. VWO and EEM previously tracked the same index until the start of this year when Vanguard transitioned almost two dozen of its ETFs from MSCI indexes to others, like FTSE.