Making its debut on 12/08/2015, smart beta exchange traded fund iShares Emerging Markets Equity Factor ETF (EMGF) provides investors broad exposure to the Broad Emerging Market ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by Blackrock. It has amassed assets over $1.26 billion, making it one of the larger ETFs in the Broad Emerging Market ETFs. This particular fund seeks to match the performance of the MSCI Emerging Markets Diversified Multiple-Factor Index before fees and expenses.
The STOXX Emerging Markets Equity Factor Index (USD) composes of stocks of large and mid-capitalization companies in emerging markets that have favourable exposure to target style factors subject to constraints.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.26% for this ETF, which makes it one of the cheaper products in the space.
EMGF's 12-month trailing dividend yield is 3.10%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Taiwan Semiconductor Manufacturing accounts for about 9.68% of total assets, followed by Tencent Holdings Ltd and Alibaba Group Holding Ltd.
Its top 10 holdings account for approximately 26.73% of EMGF's total assets under management.
Performance and Risk
The ETF has gained about 28.88% and is up about 20.34% so far this year and in the past one year (as of 10/22/2025), respectively. EMGF has traded between $41.37 and $58.19 during this last 52-week period.
The ETF has a beta of 0.59 and standard deviation of 15.93% for the trailing three-year period. With about 627 holdings, it effectively diversifies company-specific risk .
Alternatives
iShares Emerging Markets Equity Factor ETF is a reasonable option for investors seeking to outperform the Broad Emerging Market ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard FTSE Emerging Markets ETF (VWO) tracks FTSE Emerging Markets All Cap China A Inclusion Index and the iShares Core MSCI Emerging Markets ETF (IEMG) tracks MSCI Emerging Markets Investable Market Index. Vanguard FTSE Emerging Markets ETF has $103.25 billion in assets, iShares Core MSCI Emerging Markets ETF has $112.33 billion. VWO has an expense ratio of 0.07% and IEMG changes 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Emerging Market ETFs
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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iShares Emerging Markets Equity Factor ETF (EMGF): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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