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

Emerging markets are taking off in 2017.

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Emerging markets are taking off in 2017. The iShares MSCI Emerging Markets ETF (EEM (opens in new tab)), 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 (opens in new tab)), 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 (opens in new tab)) more than doubling in 2017 and JD.com (JD (opens in new tab)) 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
Senior Investing Editor, Kiplinger.com

Kyle is senior investing editor for Kiplinger.com. As a writer and columnist, he also specializes in exchange-traded funds. He joined Kiplinger in September 2017 after spending six years at InvestorPlace.com, where he managed the editorial staff. His work has appeared in several outlets, including U.S. News & World Report and MSN Money, he has appeared as a guest on Fox Business Network and Money Radio, and he has been quoted in MarketWatch, Vice and Univision, among other outlets. He is a proud graduate of The Ohio State University, where he earned a BA in journalism.