Loading…
Loading…
Emerging markets investing has a recurring frustration. You buy the asset class for diversification and growth, then find that a handful of state-owned banks, commodity giants, and speculative tech names dominate the index.
Fidelity Emerging Markets Multifactor ETF employs a multifactor strategy emphasizing valuation, quality, momentum, low volatility, and low U.S. equity correlation. FDEM has outperformed EEM in value, earnings growth, return, and risk metrics since inception. Despite a low expense, FDEM lags in total return and risk-adjusted performance versus comparable multifactor ETFs.
Emerging markets climbed over 25% in 2025 while trading at deep discounts to U.S.
Ex-U.S. equities have performed well for investors this year. Many investors and advisors entered 2025 looking to move from underweight to neutral or even overweight foreign equities positions.
Market leadership may broaden in 2026, creating opportunities outside the multi-year tech rally. Fidelity's FQAL and FDVV offer a balanced way to play both continued tech strength and market caution.
Uncertainty looms over markets in any year, but 2025 may prove exceptionally so. A particularly unpredictable policy outlook in the United States, shifting sometimes week to week, clouds the future and limits the ability for firms to plan.
In the current environment, characterized by heightened volatility, now is the time to focus on greater portfolio diversification. The diversifying power of bonds has waned, underscored by bonds' correlation with equities during the recent market sell-off.
Emerging markets have the potential to offer outsized returns, but many investors may find the inherent volatility of the asset class hard to stomach. Investors can navigate volatility in emerging markets by looking beyond traditional cap-weighted funds.