Global Emerging Market Fund: The Complete Investor Guide for 2026

Everything you need to know before investing — from how these funds work to the top options, key risks, and the right allocation for your portfolio.

By [Your Author] · CFA, Investment AnalystPublished: 2 June 2026Last Updated: 2 June 202615 min read

Contents

A global emerging market fund pools investor capital to buy equity securities across rapidly developing economies — countries like China, India, Brazil, South Korea, Taiwan, and South Africa. These funds offer a single, professionally managed vehicle for capturing long-term growth in regions that are urbanising, industrialising, and building a consuming middle class faster than most of the developed world.

In 2025, the MSCI Emerging Markets Index delivered a remarkable 34.4% return in US dollar terms — nearly double the S&P 500’s 17.9% return that year. Cheaper valuations, a weakening US dollar, and strong earnings from semiconductor and technology companies in Taiwan, South Korea, and China all contributed to this performance. Investors who had been underweight in emerging markets for years began reversing course, and inflows into the sector hit a two-year high by mid-2025.

34.4%MSCI EM Index Return 2025

4%Projected EM GDP Growth 2026

$40B+AUM in EM Ex-China Strategies (mid-2025)

5–20%Recommended Portfolio Allocation

What Is a Global Emerging Market Fund?

A global emerging market fund is a collective investment vehicle — typically a mutual fund, SICAV, or exchange-traded fund (ETF) — that invests primarily in equity securities listed on the stock exchanges of countries classified as “emerging markets” by index providers such as MSCI or FTSE Russell.

The term “emerging market” generally refers to economies that are transitioning from low-income, less-developed status toward higher-income, more industrialised economies. They are characterised by rapid economic growth, a growing middle class, improving institutional frameworks, and capital markets that are still maturing.

Which Countries Are Included?

The MSCI Emerging Markets Index — the most widely used benchmark for this asset class — currently covers 24 countries. The five largest weights are typically China, India, Taiwan, South Korea, and Brazil. Together they usually account for over 70% of the index.

📌 Key Classification Note

South Korea is classified as an emerging market by MSCI but as a developed market by FTSE Russell. This means a fund benchmarked against MSCI EM will hold South Korean stocks, while one benchmarked to FTSE EM will not — a material difference investors should check before buying.

Types of Global Emerging Market Funds

Not all global emerging market funds are structured the same way. The main categories include:

Broad active funds — managers select individual stocks across all EM countries, aiming to outperform the benchmark through stock-picking and country allocation (e.g., Federated Hermes Global Emerging Markets Equity Fund, Artemis SmartGARP Global Emerging Markets Equity Fund).
Index-tracking ETFs — passively replicate the MSCI EM or FTSE EM index at low cost (e.g., iShares Core MSCI Emerging Markets ETF, Vanguard FTSE Emerging Markets ETF).
Thematic or specialist EM funds — focus on a subset such as small/mid-cap EM stocks, sustainable EM companies, or EM excluding China.
Quantitative or systematic funds — use factor-based or algorithmic approaches (e.g., Aberdeen Global Emerging Markets Quantitative Equity Fund).

How Does a Global Emerging Market Fund Work?

Whether actively managed or passively tracking an index, every global emerging market fund follows the same fundamental mechanism: it pools money from thousands of investors and deploys that capital into a diversified portfolio of stocks in developing countries. Investors buy units or shares in the fund and share proportionally in its gains and losses.

Investment Approaches

Most actively managed funds combine two analytical layers:

Top-down country allocation — the manager analyses macroeconomic conditions, currency trends, political stability, and interest rates across EM nations to decide which countries to overweight or underweight.
Bottom-up stock selection — within chosen countries, the manager evaluates individual companies on valuation, competitive position, earnings quality, and corporate governance.

Passive index funds skip this analysis altogether. Instead they hold all (or a representative sample of) stocks in the index proportional to their market capitalisation, aiming to deliver the index return minus a small management fee.

Currency and Costs

Because emerging market stocks are priced in local currencies — Chinese yuan, Indian rupees, Brazilian reais, and dozens of others — every global emerging market fund carries inherent currency risk. Some funds offer hedged share classes that eliminate or reduce this exposure, usually at an additional cost. Unhedged funds will see their returns influenced by shifts in the US dollar or base currency against the EM currency basket.

Total expense ratios (TERs) for actively managed EM funds typically range from 0.75% to 1.5% per year. Passive ETFs charge considerably less, with some as low as 0.10%–0.25%.

Why Consider a Global Emerging Market Fund in 2026?

“Emerging markets are forecast to grow at roughly 4% in 2026 — more than double the projected pace of advanced economies, which are expected to expand by about 1.5%.” — IMF World Economic Outlook

Structural Growth Drivers

Several long-term trends make emerging markets a compelling source of growth for equity investors:

Demographics — EM countries tend to have younger populations with a growing working-age cohort, supporting domestic consumption and labour productivity.
Urbanisation and industrialisation — As more people move to cities and economies shift from agriculture to manufacturing and services, productivity rises and income levels follow.
Technology adoption — Markets such as India, Taiwan, and South Korea are now central to the global technology supply chain, particularly in semiconductors and AI infrastructure.
Energy transition — EM economies hold many of the raw materials essential for green technologies: copper, lithium, cobalt. This positions them as key beneficiaries of the global decarbonisation push.
Supply chain diversification — The “China +1” strategy, as companies redirect manufacturing to Vietnam, India, Mexico, and elsewhere, is driving new waves of foreign direct investment into several EM nations.

Valuation Opportunity

At the end of 2024, emerging market equities traded at notably lower price-to-earnings multiples compared to developed markets — particularly the US market, which had been driven to historically elevated valuations by an AI-led technology rally. This relative value gap attracted significant institutional capital in 2025 and may persist into 2026 depending on US equity performance.

📊 2025 Performance Snapshot

The MSCI Emerging Markets Index posted a 34.4% return in 2025 — its strongest year since 2009 — outperforming the S&P 500 for the first time in nearly a decade. The highest-performing active fund in the Asia-distributed segment, Robeco Emerging Stars Equities, returned 50% for the year, driven by overweights in South Korean equities.

Top Global Emerging Market Funds: An Overview

The table below provides a comparative overview of prominent global emerging market funds available to institutional and retail investors. This is not investment advice — always verify current data, charges, and eligibility directly with the fund provider before investing.

Fund Name	Manager	Approach	Benchmark	Notable Feature
Artemis SmartGARP Global Emerging Markets Equity Fund	Artemis	Active / Quantitative	MSCI EM	Proprietary SmartGARP stock-scoring model
Federated Hermes Global Emerging Markets Equity Fund	Federated Hermes	Active / Fundamental	MSCI EM	Integrated ESG engagement; long-term quality bias
BlackRock Emerging Markets Fund	BlackRock	Active / Fundamental	MSCI EM	Top-down macro + bottom-up research; large AUM
VanEck Emerging Markets Fund	VanEck	Active / S-GARP	MSCI EM	Structural Growth at Reasonable Price philosophy; 20+ year history
iShares Core MSCI Emerging Markets ETF	BlackRock (iShares)	Passive / Index	MSCI EM IMI	$144B+ AUM; very low cost; high liquidity
Vanguard FTSE Emerging Markets ETF (VWO)	Vanguard	Passive / Index	FTSE EM	5,950+ holdings; $116B+ AUM; ultra-low expense ratio
Aberdeen Global Emerging Markets Equity Fund	abrdn	Active / Quality Growth	MSCI EM	Long-standing EM specialist; available in multiple currencies
Loomis Sayles Global Emerging Markets Equity Fund	Loomis Sayles	Active / Private-equity mindset	MSCI EM	Concentrated portfolio; very low name turnover (15.8%)
T. Rowe Price SICAV Global Emerging Markets Equity Fund	T. Rowe Price	Active / Fundamental	MSCI EM	Deep proprietary research platform; UCITS SICAV format
UBS Global Emerging Markets Equity Fund	UBS Asset Management	Active / Fundamental	MSCI EM	Multiple share classes; also available as climate transition variant

Note: Several providers — including HSBC, WCM, Skerryvore, and Vontobel — offer highly regarded specialist EM equity strategies that may be better suited to institutional mandates or specific regional exposures. The list above focuses on broadly accessible funds.

Key Risks of Investing in a Global Emerging Market Fund

The potentially higher returns of a global emerging market fund come alongside a higher risk profile than most developed-market equity funds. Understanding these risks is essential before committing capital.

⚠️ Important Risk Disclosure

All investments in emerging market funds carry the risk of capital loss. The value of your investment may fall as well as rise. Past performance — including the strong 2025 results cited in this article — is not a reliable guide to future performance. This article is for informational purposes only and does not constitute financial advice.

1. Political and Regulatory Risk

Emerging market governments can change laws, impose capital controls, nationalise industries, or restrict foreign ownership with limited notice. China’s regulatory crackdowns on technology and education companies in 2021 and 2022 erased hundreds of billions in market value practically overnight — a lesson that political risk is never theoretical in this asset class.

2. Currency Risk

Returns in emerging market funds are denominated in dozens of local currencies. A sharp depreciation in the Brazilian real, Turkish lira, or South African rand relative to the investor’s base currency can significantly erode returns even when local stock prices are rising.

3. Liquidity Risk

Many emerging market stocks trade in thinner, less liquid markets than their developed-world counterparts. In periods of stress, bid-ask spreads widen and it can be difficult to exit positions without moving the price — a risk that is amplified in smaller markets and small/mid-cap EM strategies.

4. Economic and Trade Sensitivity

Emerging market economies are frequently sensitive to global financial conditions: US interest rates, the strength of the dollar, and risk appetite among developed-market investors. When the US Federal Reserve tightens monetary policy, capital tends to flow out of EM and toward the dollar. Growth projections for parts of Latin America and Asia were revised downward in early 2025 precisely because of tariff threats and global trade uncertainty.

5. Information and Governance Risk

Corporate governance standards, accounting practices, and disclosure requirements vary significantly across EM countries. Information asymmetry — where local investors and company insiders have better information than foreign fund managers — is a genuine challenge in markets with less developed regulatory frameworks.

Active vs Passive: Which Global Emerging Market Fund Is Right for You?

The debate between active and passive investing applies to emerging markets just as it does to developed-market equities — but the calculus is somewhat different.

Factor	Active EM Fund	Passive EM ETF
Annual Cost (TER)	0.75% – 1.50%	0.10% – 0.25%
Potential to Beat Index	Yes (but not guaranteed)	No — tracks index minus fee
ESG / Governance Screening	Often integrated	Limited unless specialist ESG ETF
Country/Sector Flexibility	High — manager can overweight/underweight	None — weights follow index
China Concentration Risk	Manager can reduce	Must hold index weight (~25–30%)
Transparency	Monthly/quarterly holdings disclosure	Daily holdings published
Tax Efficiency	Lower turnover strategies more efficient	Generally tax efficient

The case for active management is somewhat stronger in emerging markets than in large-cap developed markets, primarily because information inefficiencies are larger, corporate governance varies widely, and country allocation decisions can meaningfully move portfolio outcomes. However, the higher fee hurdle means many active funds still fail to outperform the index net of costs over a full cycle. For most retail investors, a low-cost passive ETF is a sensible starting point.

How to Invest in a Global Emerging Market Fund: Step by Step

Define your investment objective — Are you seeking long-term capital growth, portfolio diversification, or income? EM funds are predominantly growth-oriented. Establish your time horizon (generally 7+ years is recommended for EM equity exposure) and risk tolerance before proceeding.
Choose between active funds and passive ETFs — If cost is your primary concern, a broad index ETF (such as the iShares Core MSCI Emerging Markets ETF or Vanguard FTSE Emerging Markets ETF) is a logical starting point. If you want professional country and stock selection, research actively managed global emerging market funds from established providers.
Decide on EM exposure breadth — Broad EM funds cover all countries in the benchmark. Alternatively, you may opt for an EM ex-China fund if you prefer to manage your China exposure separately — a strategy that has grown significantly, with assets in EM ex-China strategies expanding from $6.3 billion in early 2022 to over $40 billion by mid-2025.
Review costs and charges — Compare total expense ratios, any initial charges, and whether the fund uses swing pricing or dilution levies to protect existing investors when large flows occur.
Open a brokerage or investment platform account — Most major investment platforms (interactive brokers, Fidelity, Vanguard, and country-specific platforms) offer access to a wide range of global emerging market funds and ETFs. Ensure the platform you choose is regulated and that the specific fund is available in your country of residence.
Decide on lump sum or regular investment — Regular investing (pound-cost or dollar-cost averaging) reduces the risk of investing at a market peak and is well-suited to the higher volatility of emerging market assets.
Monitor but resist over-trading — Emerging market funds are best treated as long-term holdings. Short-term performance can be highly volatile. Quarterly reviews are sufficient for most investors; avoid reacting to daily market noise.

How Much of Your Portfolio Should Be in a Global Emerging Market Fund?

There is no single correct answer — allocation depends on your age, risk tolerance, income needs, existing holdings, and investment goals. The following guidelines reflect commonly cited industry benchmarks:

Conservative investors / near retirement: 0–5% of the total portfolio. EM volatility is poorly suited to investors who cannot afford meaningful drawdowns.
Balanced / moderate-risk investors: 5–10% of the total portfolio. This is the range most often cited by financial advisers for those seeking diversification without excessive EM concentration.
Growth-oriented / long-horizon investors: 10–20% of the total portfolio. A higher allocation makes sense for those with a 10+ year time horizon and a genuine appetite for risk in exchange for higher expected returns.

💡 Practical Consideration

Many global equity index funds already include a built-in EM weighting of 10–15% by market capitalisation. If you hold a broad global equity fund or ETF, check how much EM exposure you already have before adding a dedicated global emerging market fund on top.

Frequently Asked Questions

What is the difference between a global emerging market fund and a developed market fund?

A global emerging market fund invests in stocks listed in countries classified as emerging or developing economies — such as China, India, Brazil, and South Africa. A developed market fund focuses on countries with more mature economies and capital markets, such as the US, UK, Germany, and Japan. Emerging market funds typically offer higher growth potential but carry greater volatility, currency risk, and political risk.

Are global emerging market funds a good investment in 2026?

Emerging market funds offer compelling diversification and growth potential in 2026 — expected GDP growth of around 4% is more than double the pace of advanced economies. However, they are not suitable for all investors. They carry significant currency risk, geopolitical uncertainty, and short-term volatility. They are best considered as a long-term allocation within a diversified portfolio rather than a standalone investment or short-term trade.

How risky are emerging market funds compared to developed market funds?

Considerably more volatile. Emerging market stock markets are at earlier stages of development, have thinner liquidity, and are more exposed to political and currency shocks. In periods of global risk aversion, EM equities typically sell off more sharply than developed market equivalents. The higher expected return comes with a meaningfully higher risk of drawdown.

What is the MSCI Emerging Markets Index?

The MSCI Emerging Markets Index is the benchmark most widely used by global emerging market fund managers and ETF providers. It tracks large- and mid-cap stocks across 24 emerging market countries, currently representing approximately 11% of the world’s total investable equity universe. China typically accounts for the largest single-country weight, followed by India, Taiwan, South Korea, and Brazil.

What does “MSCI EM ex-China” mean?

An EM ex-China fund or index invests across all emerging market countries except China. Some investors prefer this approach so that they can manage their China exposure independently, given the unique political, regulatory, and geopolitical risks attached to Chinese equities. Assets in EM ex-China strategies grew from $6.3 billion in early 2022 to over $40 billion by mid-2025, reflecting strong demand for this approach.

What is the minimum investment in a global emerging market fund?

Minimums vary widely. Most retail UCITS funds have minimums of £500–£1,000 (or currency equivalent) for one-off purchases, or as little as £25–£50 per month for regular savings plans. ETFs can be bought from the price of a single share on most brokerage platforms. Institutional share classes typically require minimums of $1 million or more.

Can I lose all my money in an emerging market fund?

A total loss is extremely unlikely in a broadly diversified global emerging market fund because the portfolio holds hundreds or thousands of stocks across multiple countries. However, it is entirely possible to lose a significant portion of your invested capital over any given period. Concentrated country funds or single-stock emerging market exposure carry far higher risk of severe loss.