So you think you should choose the right country to invest in emerging markets, huh…

About a few years ago, someone in my Telegram chat brought up the topic of investing in emerging markets.

He can justify owning an index fund to be diversified and capture the average returns of an ever-evolving basket of securities.

But when it comes to emerging markets, there are emerging markets to avoid and there are emerging markets that would do well.

According to him, you have to choose which emerging market you want to focus on.

Actually, I don’t know.

I’m learning that people can conclude different things based on how they see the market, which can be very different information than mine.

Usually I assume this is something we should observe as we go along rather than dismiss it.

Sometime in 2020 I developed this weird hobby: collecting ETF and fund information sheets. I realize these fund companies won’t show you older fact sheets, but sometimes… we’re better off learning through experience.

I have kept an October 2020 fact sheet from the DISTILLATION what is the ticker for iShares Core MSCI EM IMI UCITS ETFan ETF that tracks the MSCI Emerging Markets IMI index. IMI stands for investable market index, which includes the large, mid and small caps.

Below you will find the top 10 holding companies from EIMI’s fact sheet in October 2020:

See the dominance of the Chinese companies Alibaba, Tencent, Meituan. At that point, most of Nasper’s value comes from its ownership of Tencent.

To give you a graphical picture, I have plotted the return trajectory of these ten companies (and a few others, which I will explain later) since EIMI was founded in 2014:

My reader is not wrong about that. EIMI has since returned 23.4%, or 3.4% per year over 6.3 years.

Looking at this performance, what would you focus on in a sense for emerging markets? China?

I think you would.

Let’s move forward to December 2023 or three years later by checking out the fact sheet:

Oh… suddenly China’s share of EIMI dropped from 38% to 23%.

In a sense, India’s allocation has increased from 8% to 18%. HDFC Bank is starting to emerge. In a way, it seems like TSMC and Samsung didn’t change much, it was the Chinese companies that fell.

We are also starting to see this interesting company called SK Hynix appear in the top 10 with 0.72% of EIMI.

Let’s go to March last year (2025):

Chinese companies recovered. You see many more Chinese companies popping up. They will probably replace the Brazilian and South American companies. SK Hynix is ​​​​no more.

Let’s move forward a few more months to August:

Oh SK Hynix emerges again! We also see Xiaomi emerging.

Then now in January 2026:

How did SK Hynix go from nothing in March 2025 to 2.69% in January 2026???

I’ve put all the original top 10 stocks featured in the October 2020 EIMI fact sheet along with EIMI in the following chart to show performance since then:

This also includes dividends.

EIMI did approximately 69% in these six years, or 9.1% per year

That’s not bad.

If you choose to invest only in China, would you do so?

1. The FXI gained a total of -1.31%.
2. The CNYA achieved a total of 11.4%.

I think what might surprise them is that China Construction Bank did so much better!

And touch your heart if you think that Taiwan and South Korea will be the ones to carry the EIMI hard in 2020.

If there’s one general lesson we can learn, it’s to think about it seriously how confident you are about how the future will turn out, which will influence your investment choice.

Think about times when you have a vision of which sectors and regions will do well and whether they will work out well or not.

And if you’re not so sure, how sure were you today?

Diversification may not give you the highest returns, but it works well when you’re less sure where things will go well in the future.

Diversification in this case is not about risk.

It’s also about capturing and harvesting yields.

I think this is less said than risk management.

I have invested in a diversified portfolio of exchange traded funds (ETF) and stocks listed in the US, Hong Kong and London.

My favorite broker to trade and hold my investments is Interactive real estate agents. With Interactive Brokers you can trade in the US, UK, Europe, Singapore, Hong Kong and many other markets. Options too. There are no minimum monthly fees, very low currency exchange fees, very low commissions for different markets.

For more information visit Interactive Brokers today.

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Kyith worked as an IT operations engineer from 2004 to 2019. He currently works as a Senior Solutions Specialist at Fee-only Wealth Advisory Firm Providend. All opinions expressed on Investment Moats are his own and do not represent the views of Providend.

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