Investing in Emerging Markets: Worth the RISK?

Is investing in Emerging Markets via ETFs worth the risk?

Let's discuss if investing in an Emerging Markets ETF or including EM stocks via the Vanguard FTSE All-World is a good idea based on their historical returns or if you're better off choosing an MSCI World or FTSE Developed World ETF instead!

My Favorite Brokers (ETFs & Stocks):

My Current Top 3 in P2P Lending:

ℹ️ Time-Stamps:
00:00 GDP Growth vs Investment Returns
01:40 Pros of Investing in Emerging Markets
03:33 Cons of Investing in Emerging Markets
06:37 Differences Between FTSE All-World and FTSE Developed World
08:06 Is the Percentage of U.S. Stocks in World ETFs Too High?
09:05 Best Developed Markets ETF: MSCI World or FTSE Developed World?
10:06 Best Emerging Markets ETF
10:49 Global ETFs incl. EM
11:21 Should You Invest in Emerging Markets?

📈 ETFs mentioned (Acc = Accumulating, Dis = Distributing, ticker symbols in brackets):

Global (incl. EM):
Vanguard FTSE All-World Acc. (VWCE)
Vanguard FTSE All-World Dis. (VWRL or VGWL)
SPDR MSCI ACWI IMI Acc. (SPYI)

Developed Markets:
Vanguard FTSE Developed World Acc. (VHVE or VGVF)
Vanguard FTSE Developed World Dis. (VEVE or VGVE)
iShares Core MSCI World Acc. (IWDA)
SPDR MSCI World Acc. (SPPW)
HSBC MSCI World Dis. (WRD or H4ZJ)

Emerging Markets:
Vanguard FTSE Emerging Markets Acc. (VFEA)
Vanguard FTSE Emerging Markets Dis. (VFEM)
iShares Core MSCI Emerging Markets IMI Acc. (EMIM)
iShares Core MSCI Emerging Markets IMI Dis. (IBC3)

You can buy them using the best low-cost brokers in Europe for ETFs (links at the top☝️ if you'd like to support me).

Sources used:

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Some of the links are affiliate links, which help support me and the YouTube channel. Still, none of the links are sponsored.

Disclaimer: I am only sharing my own experience. I'm not a financial advisor and you should always do your own research and due diligence before investing. Investing involves risk of losses.

[israeltapia]

The comparison table related to the less exposure we would get by investing in an emerging market to a developed one was great! Thanks.

[filevanderl]

Thank you for another fantastic video. I really appreciate that you mentioned that many global companies are currently present in emerging markets and own some share in those markets. This means we as an investors can benefit from it. I believe EM suffer from immature or volatile political systems which is not worth the risk.

[MrEpphrodont]

Thanks for your vidéo Angelo ! I started to invest monthly to VWCE and I'm saving a lot more than I used to. Have a good day

[jean-francoislarocque-drol]

You mentioned it briefly, but there are political risks for foreign investors in emerging markets, and this type of risk does not show in the data going back to 1900. In short, it means that those weak returns that you saw are even lower than advertised. When I see how Russia and China are acting right now with Ukraine, I'm genuinly wonder if I want them to use my capital to build their economies only to make war on us after. I'd rather keep this capital with the developped market.

[whispie.]

I think the key is whether you believe that 🇮🇳 and 🇨🇳 will introduce additional protectionist measures that will prevent foreign companies from operating freely there (e.g. Preventing 🇨🇳 gov officials from using iPhone).
I do believe that and that's why I allocate a little % of my portfolio to CSEMAS etf

[lawfirmbersani]

Great video Angelo.
Also, geopolitical forecasts list India and China as 3rd and 2nd most powerful Countries in 2030-2050, so it makes sense to invest in EM.

[minhtutwin]

would going 90% vanguard developed world and 10% vanguard EMs be a smarter move than 100% vanguard all world? since developed world have a much lower TER than all world

[vincewoo]

Thank you for sharing info on Emerging market funds. Personally I don't invest in EM funds. As you mentioned in the late part of the video, most big companies from the US are doing business and generate revenues from emerging markets. Investing solely in SP500 is sort of indirectly investing in EM. Secondly, I don't like the volatility of EM funds.

[TheRocker]

As an investor living in France I have around 5% of my actions portfolio invested in a CAC40 ETF which contains the 40 best french companies, like L'Oreal who sell a fair amount of their products to emerging markets, so I like to think that that gives me some exposure to EM. For the remaining 95% I'm stiking with an MSCI World for the time as it continu to perform very well (and outperforms the CAC40)

[lsismeiro]

Nice video. I have been a S&P 500 guy but recently I started including STOXX 600 to increase my indirect exposure to EM since europe does a lot of trading with this countries, even more than the US AFAIK. This way I can also control the ratio more easealy, I will try to have about 30% STOXX 600.

[Woj_Poznanski]

Great video. So far I was 100% in developed markets ETFs and stocks. I decided to add some exposure to EM as well only recently.

[MattMcQueen]

Nice video. My preference is for developed world ex-UK - the UK hasn't performed well for many years, and that situation doesn't look like changing any time soon.

[gabrielenicolini]

Angelo - Molto interessante! Thank you!

[albema]

Angelo, great video, thanks. what do you think about currency risk hedging on global investing? if euro go down vs usd and globally have you plan to hedge

[OpenDoorEnglish]

VGVF looks like a great ETF - I currently use Vanguard All World but i could well be tempted to convert!

[pistopitpit]

It’s easy to turn away from EM considering downhill trend of the recent years and this way crystallising losses.
Feels like the classic investor’s mistake selling the asset in the worst time. So advice from me is if you already invested in EM, stick to it.

[veo]

FTSE 70 / 30 Split and i am happy with it

[dzmitryart]

My personal strategy is 75% msci world / 25% msci em ex china.
Angelo, what do you think about ex-china etfs?

[iasonas]

Angelo, I'm very new to this and I'm planning to grow a 2 etf portfolio. Do you think investing in s&p 500 (vuaa) and ftse all world is a bad strategy because of the overlap? Thanks!

[MetalBum]

Good question. What’s the best VWO vanguard for low expenses??