So far in 2026, there has been growing interest in international and emerging market stocks and exchange-traded funds (ETFs). According to the research of Bank of America At the beginning of this year, four times more money was flowing into international stocks than into US stocks.
There are several reasons for this, but primarily it is a sign of investors moving away from US equities, primarily large-cap stocks, which have generally become overvalued after a three-year bull market. Additionally, international and emerging market stocks are benefiting from a weaker dollar, accommodative monetary policy and a broader artificial intelligence (AI) boom driven by increased infrastructure investment, among other factors.
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Diversification is always important, but it is becoming even more important now, especially for investors whose portfolios were topped with large-cap US growth stocks during the bull market. This means it makes sense to diversify with both International Stocks and ETFs Investing in companies from developed countries as well as emerging markets.
A great way to break into emerging markets State Street SPDR Portfolio Emerging Markets ETF (SPEM +0.38%).
Covering the scope of emerging markets
The State Street SPDR Portfolio Emerging Markets ETF gives investors access to emerging market stocks with approximately 3,000 holdings.
It tracks the S&P Emerging BMI Index, which provides broad exposure to emerging market stocks. And by broad, I mean all of them – the investable universe of emerging markets across large, mid and small caps.
As I write this, the ETF holds 2,983 stocks from 30 different emerging markets. About 29% of the portfolio is made up of China stocks, while 28% are from Taiwan and 16% from India. Brazilian stocks account for 5% of the portfolio, while South African and Saudi Arabian stocks account for 3% each.
SPDR Index Share Fund – State Street SPDR Portfolio Emerging Markets ETF
today's change
(0.38%) $0.19
current price
$50.66
key data points
day limit
$50.58 -$50.81
52wk range
$39.40 -$51.75
volume
254K
Technology is the largest sector, making up 28% of the ETF, followed by the financial sector at 21% and consumer discretionary stocks at 10%.
The top three holdings are Taiwan Semiconductor, tencent holdings from China, and alibaba groupAlso from China.
Beating the S&P 500 and Russell 3000
SPEM has given a return of 9% so far, which is the top S&P 500 and mass market russell 3000. It has given returns of 30% in the last one year. Over the past five and 10 year periods it has not performed as well as its US counterparts, but these have been strong cycles for US equities.
Markets move in cycles, and some experts, including some vanguardInternational stocks are expected to outperform US stocks over the next decade, making diversification with emerging markets important.
With its broad exposure, this ETF is a solid choice for investors who do not have in-depth knowledge of emerging markets but want to diversify. You don't need to take a huge position, but even a small allocation in emerging market ETFs like these can provide a good balance against volatile US markets.