VWO Stock Recent News

Many investors are wondering if it's the right time to add exposure to emerging markets. With ongoing market uncertainty and the possibility of a recession, investors may be wary to add exposure to riskier segments of the market.

Today, State Street Global Advisors cut the fees on 10 of its already-rock-bottom-priced “Portfolio” ETFs representing core asset classes. Most notably, the $19.7 billion SPDR Portfolio S&P 500 ETF (SPLG) saw its expense ratio decreased by one-third.

Many emerging markets investors are looking to diversify away companies under Chinese President Xi Jinping's control without sacrificing performance. A solution for investors may be the Hartford Multifactor Emerging Markets ETF (ROAM), which underweights mega-cap tech and China compared to category peers and the benchmark MSCI Emerging Markets index.

Equity markets have seen strong, double-digit capital gains this year, with emerging market equities being an exception with weak, inconsistent single-digit gains. Despite recent underperformance, emerging market equities offer investors cheap prices and good growth prospects, making them a good buy for the future. Vanguard FTSE Emerging Markets Index Fund ETF Shares is an emerging market equities index fund, providing diversified exposure to said asset class.

The Vanguard FTSE Emerging Markets Index Fund ETF has reacted positively to the recent drop in US inflation and declining interest rate expectations. The VWO tracks the performance of the FTSE Emerging Markets index and offers exposure to large-cap EM stocks with a low expense ratio of 0.1%. Despite recent gains, the outlook for the VWO relative to bonds continues to deteriorate due to rising short-term bond yields and the widening gap between UST yields and the VWO's dividend yield.

The founder of Bridgewater Associates, Ray Dalio (Trades, Portfolio), has always been a subject of intrigue among investors. With its principles-based approach and sophisticated algorithms, the recent trades and portfolio adjustments of the guru's firm offer valuable insights into its investment strategy.

High dividend yield ETFs gained popularity when interest rates were near zero because investors found it hard to generate sufficient income from their investments. That was especially true regarding guaranteed investments such as U.S. Treasuries.

Emerging Markets have a low-teens P/E ratio, but the long-run multiple is also low. VWO holds more than a one-third weighting in China.

There is an opportunity to over-allocate towards emerging markets in 2023 due to softening USD, reopening China and firm commodities. Emerging markets do well when the USD is softening and cooling inflation may allow the Federal Reserve to pause earlier than expected.

The higher yield on the FTSE Emerging Markets index suggests the VWO should outperform the MSCI World by almost 2 percentage points annually assuming no valuation changes. The higher dividend yield reflects the significantly lower P/E ratio on EM stocks, which trade at a 40% discount to the MSCI World on an unadjusted basis.