In 2025, the MSCI Emerging Markets Index outperformed the S&P 500 for just the second time since 2019. This year, investors poured $6.88 billion into the Vanguard FTSE Emerging Markets ETF, the second-largest fund in its category, signaling a shift in sentiment towards emerging market stocks.

Despite being more volatile, the Vanguard ETF has been less turbulent than basic S&P 500 index funds over the past three years. This fund follows the FTSE Emerging Markets All Cap China A Inclusion Index, offering a unique exposure to emerging markets without South Korean stocks.

The Vanguard ETF’s exclusion of South Korean stocks has led to a heavier focus on China, Taiwan, and India, making up 74.5% of its geographic exposure. With a significant weight in technology and consumer discretionary sectors, this fund has shifted away from traditional commodities-dependent investments.

With over 6,000 holdings, this Vanguard ETF offers investors a diversified exposure to emerging markets at a low cost. Its annual expense ratio is just 0.07%, positioning it as one of the cheapest options in the category while delivering long-term performance advantages.

While the Vanguard FTSE Emerging Markets ETF presents an opportunity for investors, it’s important to consider all aspects before adding it to a portfolio. The Motley Fool Stock Advisor team recently identified 10 stocks with potential for significant returns, highlighting the importance of thorough research and analysis in investment decisions.

Read more at Yahoo Finance: What to Consider Before Adding This Emerging Markets ETF to Your Portfolio