5 Emerging-Markets Funds That Are Crushing U.S. Stocks

Emerging markets are taking off in 2017.

(Image credit: Getty Images)

Emerging markets are taking off in 2017. The iShares MSCI Emerging Markets ETF (EEM), which serves as a popular proxy for emerging-markets investors, set fresh six-year highs this week. It’s up 30% year-to-date, versus a 12% gain for Standard & Poor’s 500-stock index.

What’s elevating these far-off equities?

For one, credit the weakening U.S. dollar. The PowerShares DB US Dollar Index Bullish Fund (UUP), which tracks the U.S. dollar against six major world currencies, has declined nearly 10% since Jan. 1 to reach its lowest point since 2014. A weak dollar, in general, is good for emerging markets. It makes it cheaper for overseas companies to pay down their dollar-denominated debt, and they also reap higher prices for commodity exports, which is big business in emerging markets.

There are other drivers, too. Chinese technology companies, for instance, have erupted this year, with e-commerce plays Alibaba (BABA) more than doubling in 2017 and JD.com (JD) rising nearly 80%. India’s NSE index recently hit all-time highs on optimism about the festival season, when consumer spending soars. But India had already been on a roll for the past couple of years thanks to economic growth and financial reforms targeting corruption and black markets.

The good news: Most of these drivers should still have some gas in the tank. Here are five exchange-traded funds to harness the resurgent growth in emerging markets. Each ETF offers a slightly different approach. Pick the one that’s right for your portfolio.

Data is as of Sept. 20, 2017. Click on symbol links in each slide for current share prices and more. Yields represent the trailing 12-month yield, which is a standard measure for equity funds.

Kyle Woodley

Kyle Woodley is the Editor-in-Chief of WealthUp, a site dedicated to improving the personal finances and financial literacy of people of all ages. He also writes the weekly The Weekend Tea newsletter, which covers both news and analysis about spending, saving, investing, the economy and more.

Kyle was previously the Senior Investing Editor for Kiplinger.com, and the Managing Editor for InvestorPlace.com before that. His work has appeared in several outlets, including Yahoo! Finance, MSN Money, Barchart, The Globe & Mail and the Nasdaq. He also has appeared as a guest on Fox Business Network and Money Radio, among other shows and podcasts, and he has been quoted in several outlets, including MarketWatch, Vice and Univision. He is a proud graduate of The Ohio State University, where he earned a BA in journalism. 

You can check out his thoughts on the markets (and more) at @KyleWoodley.