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Investing in Emerging Markets: KDEF, EWY and More Top-Performing ETFs
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Investing in Emerging Markets: KDEF, EWY and More Top-Performing ETFs
Emerging markets are developing countries with volatile, fast-growing economies. Investing in emerging markets, through funds such as KDEF or EWY can be a way to diversify your portfolio.
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9 years of experience Expertise Stocks ETFs economic newsSam Taube writes about investing for NerdWallet. He has covered investing and financial news since earning his economics degree from the University of Maryland in 2016. Sam has previously written for Investopedia, Benzinga, Seeking Alpha, Wealth Daily and Investment U, and has worked as an editor for Investment U, Wealth Daily and Haven Investment Letter. He is based in Brooklyn, New York.
Sam Taube writes about investing for NerdWallet. He has covered investing and financial news since earning his economics degree from the University of Maryland in 2016. Sam has previously written for Investopedia, Benzinga, Seeking Alpha, Wealth Daily and Investment U, and has worked as an editor for Investment U, Wealth Daily and Haven Investment Letter. He is based in Brooklyn, New York. Published in Lead Writer + more + more
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12 years of experience Expertise Brokerage accounts stock market cryptocurrencyChris Davis is a Managing Editor on the Investing team. He has passed the Series 65 (Uniform Investment Adviser Law Exam) and covered the stock market, investing strategies, investment accounts and cryptocurrency. His work has appeared in The Associated Press, The Washington Post, MSN, Yahoo Finance, MarketWatch, Newsday and TheStreet.
Chris Davis is a Managing Editor on the Investing team. He has passed the Series 65 (Uniform Investment Adviser Law Exam) and covered the stock market, investing strategies, investment accounts and cryptocurrency. His work has appeared in The Associated Press, The Washington Post, MSN, Yahoo Finance, MarketWatch, Newsday and TheStreet. Published in Managing Editor + more + moreTable of Contents
What are emerging markets? What are emerging markets? Should I invest in emerging markets? Should I invest in emerging markets? 9 top-performing emerging market ETFs as of March 2026 9 top-performing emerging market ETFs as of March 2026 Investing in emerging market stocks Investing in emerging market stocks Nerdy takeawaysEmerging markets, as defined by MSCI, are 24 developing countries with volatile, fast-growing economies.
Emerging market investments can provide diversification and potentially rapid growth to a portfolio, but they can also be risky.
KDEF and EWY are among the best-performing emerging market ETFs this year.
You may also be able to buy individual emerging market stocks, although this may not be right for every investor.
Table of Contents
What are emerging markets? What are emerging markets? Should I invest in emerging markets? Should I invest in emerging markets? 9 top-performing emerging market ETFs as of March 2026 9 top-performing emerging market ETFs as of March 2026 Investing in emerging market stocks Investing in emerging market stocks Nerdy takeawaysEmerging markets, as defined by MSCI, are 24 developing countries with volatile, fast-growing economies.
Emerging market investments can provide diversification and potentially rapid growth to a portfolio, but they can also be risky.
KDEF and EWY are among the best-performing emerging market ETFs this year.
You may also be able to buy individual emerging market stocks, although this may not be right for every investor.
The U.S. stock market has experienced dizzying volatility in 2025 related to new tariffs, and many major U.S. stock indexes, such as the S&P 500, are in the red for the year so far. Yet the stock markets of certain developing countries, such as Mexico and Poland, have positive year-to-date returns.
The U.S. stock market has experienced dizzying volatility in 2025 related to new tariffs, and many major U.S. stock indexes, such as the S&P 500, are in the red for the year so far. Yet the stock markets of certain developing countries, such as Mexico and Poland, have positive year-to-date returns.In investing parlance, these developing countries are called emerging markets. Investing in emerging markets can be a potentially profitable way to diversify your investment portfolio, especially during times of economic uncertainty in the U.S.
In investing parlance, these developing countries are called emerging markets. Investing in emerging markets can be a potentially profitable way to diversify your investment portfolio , especially during times of economic uncertainty in the U.S.What are emerging markets?
What are emerging markets?Emerging markets are countries with fast-growing economies. They’re also called developing economies or developing countries. Emerging markets are often contrasted with so-called “established markets” or “advanced economies” like the U.S., which tend to be wealthier and more stable, but slower-growing.
Emerging markets are countries with fast-growing economies. They’re also called developing economies or developing countries. Emerging markets are often contrasted with so-called “established markets” or “advanced economies” like the U.S., which tend to be wealthier and more stable, but slower-growing.Index provider MSCI classifies 24 countries as emerging markets
Index provider MSCI classifies 24 countries as emerging markets MSCI. Emerging Markets Indexes. . They're listed below:Brazil
BrazilChile
ChileChina
ChinaColombia
ColombiaCzechia
CzechiaEgypt
EgyptGreece
GreeceHungary
HungaryIndia
IndiaIndonesia
IndonesiaKuwait
KuwaitMalaysia
MalaysiaMexico
MexicoPeru
PeruPhilippines
PhilippinesPoland
PolandQatar
QatarSaudi Arabia
Saudi ArabiaSouth Africa
South AfricaSouth Korea
South KoreaTaiwan
TaiwanThailand
ThailandTurkey
TurkeyUnited Arab Emirates
United Arab EmiratesYou may notice that certain notable emerging markets, such as Russia, are missing from the list above.
You may notice that certain notable emerging markets, such as Russia, are missing from the list above.There is no universal standard for noting which countries are emerging markets, and indexers like MSCI often have geopolitical concerns to work around. Russia, for example, is an emerging market by most definitions. But it’s largely unavailable to Western investors for reasons related to the Russia-Ukraine war, so MSCI stopped tracking it in 2022.
There is no universal standard for noting which countries are emerging markets, and indexers like MSCI often have geopolitical concerns to work around. Russia, for example, is an emerging market by most definitions. But it’s largely unavailable to Western investors for reasons related to the Russia-Ukraine war, so MSCI stopped tracking it in 2022.Should I invest in emerging markets?
Should I invest in emerging markets?Investing in emerging markets might sound advanced or out of reach for novice investors, but there’s a strong argument for diversifying outside of the U.S. Even simple portfolios, such as those that contain only two or three funds, often include some exposure to international stocks. After all, a stock market crash in the U.S. might not hit international markets as hard.
Investing in emerging markets might sound advanced or out of reach for novice investors, but there’s a strong argument for diversifying outside of the U.S. Even simple portfolios , such as those that contain only two or three funds, often include some exposure to international stocks . After all, a stock market crash in the U.S. might not hit international markets as hard.In 2025, concerns related to the effects of new tariffs have hammered U.S. stocks. But many publicly traded companies in emerging markets do most of their business domestically, and aren't particularly vulnerable to disruptions of trade with the U.S. That's why the Mexican stock market, for example, is up around 16% year-to-date, despite Mexico being hit with heavy tariffs from the U.S. Many of the components of the IPC Mexico index (the Mexican equivalent of the S&P 500) are companies that earn most of their revenue in Mexico.
In 2025, concerns related to the effects of new tariffs have hammered U.S. stocks. But many publicly traded companies in emerging markets do most of their business domestically, and aren't particularly vulnerable to disruptions of trade with the U.S. That's why the Mexican stock market, for example, is up around 16% year-to-date, despite Mexico being hit with heavy tariffs from the U.S. Many of the components of the IPC Mexico index (the Mexican equivalent of the S&P 500) are companies that earn most of their revenue in Mexico.However, there's a catch. In theory, faster GDP growth in emerging markets should also translate into faster stock market growth, but this doesn’t always work out in practice. Many of the ETFs listed above have underperformed the S&P 500 over the last five years, for a variety of reasons.
However, there's a catch. In theory, faster GDP growth in emerging markets should also translate into faster stock market growth, but this doesn’t always work out in practice. Many of the ETFs listed above have underperformed the S&P 500 over the last five years, for a variety of reasons.Some emerging markets, such as Kuwait and Saudi Arabia, have energy-dominated economies that tend to boom when oil prices are high, and decline when they’re low. Others, such as Poland and Turkey, have unique security risks because they border active war zones.
Some emerging markets, such as Kuwait and Saudi Arabia, have energy-dominated economies that tend to boom when oil prices are high, and decline when they’re low. Others, such as Poland and Turkey, have unique security risks because they border active war zones.There’s a common thread between these underperformances: Emerging markets tend to be less stable than established markets. They may be faster-growing, but that fast growth is more vulnerable to interruptions, like shifts in global resource markets or armed conflict.
There’s a common thread between these underperformances: Emerging markets tend to be less stable than established markets. They may be faster-growing, but that fast growth is more vulnerable to interruptions, like shifts in global resource markets or armed conflict.One way to manage this kind of risk is by investing in several emerging markets at once through a diversified emerging markets ETF, rather than a country-specific one.
One way to manage this kind of risk is by investing in several emerging markets at once through a diversified emerging markets ETF, rather than a country-specific one.» Interested in ETFs? Check out the best ETFs tracking popular indexes
» Interested in ETFs? » Interested in ETFs? Check out the best ETFs tracking popular indexes9 top-performing emerging market ETFs as of March 2026
9 top-performing emerging market ETFs as of March 2026Below is a list of the nine best-performing emerging markets ETFs listed by Finviz, ranked by one-year return.
Below is a list of the nine best-performing emerging markets ETFs listed by Finviz, ranked by one-year return.Ticker
Ticker
TickerCompany
Company
CompanyPerformance (Year)
Performance (Year)
Performance (Year)KDEF
KDEFPLUS Korea Defense Industry Index ETF
PLUS Korea Defense Industry Index ETF138.94%
138.94%EWY
EWYiShares MSCI South Korea ETF
iShares MSCI South Korea ETF124.91%
124.91%FLKR
FLKRFranklin FTSE South Korea ETF
Franklin FTSE South Korea ETF114.24%
114.24%MKOR
MKORMatthews Korea Active ETF
Matthews Korea Active ETF106.77%
106.77%EPU
EPUiShares MSCI Peru and Global Exposure ETF
iShares MSCI Peru and Global Exposure ETF81.85%
81.85%EMEQ
EMEQNomura Focused Emerging Markets Equity ETF
Nomura Focused Emerging Markets Equity ETF73.25%
73.25%FTHF
FTHFFirst Trust Emerging Markets Human Flourishing ETF
First Trust Emerging Markets Human Flourishing ETF67.09%
67.09%CNXT
CNXTVanEck ChiNext ETF
VanEck ChiNext ETF62.89%
62.89%EMDM
EMDMFirst Trust Bloomberg Emerging Market Democracies ETF
First Trust Bloomberg Emerging Market Democracies ETF62.09%
62.09%Source: Finviz. Data is current as of April 3, 2026, and is intended for informational purposes only.
Source: Finviz. Data is current as of April 3, 2026, and is intended for informational purposes only.Of course, it’s worth researching an ETF before you buy it, just as you would research stocks. Different emerging markets ETFs may have different holdings — and if you’re looking for exposure to a specific company in an emerging market, you may want to consider investing in it directly.
Of course, it’s worth researching an ETF before you buy it, just as you would research stocks . Different emerging markets ETFs may have different holdings — and if you’re looking for exposure to a specific company in an emerging market, you may want to consider investing in it directly.» More on index funds: Check out some of the best index funds in terms of long-term performance.
» More on index funds: » More on index funds: Check out some of the best index funds in terms of long-term performance.Investing in emerging market stocks
Investing in emerging market stocksThere are a few emerging market stocks that are directly listed on U.S. exchanges — largely bank stocks. For example, HDFC Bank, India’s largest bank, trades on the New York Stock Exchange under the ticker “HDB.”
There are a few emerging market stocks that are directly listed on U.S. exchanges — largely bank stocks . For example, HDFC Bank, India’s largest bank, trades on the New York Stock Exchange under the ticker “HDB.”Some others are available via over-the-counter (OTC) markets — although it’s worth checking an OTC emerging market stock’s trading volume on a website like Yahoo Finance or Google before buying it. Buying a low-volume OTC stock at a good price can be tricky.
Some others are available via over-the-counter (OTC) markets — although it’s worth checking an OTC emerging market stock’s trading volume on a website like Yahoo Finance or Google before buying it. Buying a low-volume OTC stock at a good price can be tricky.Even large conglomerates like South Korea’s Hyundai (HYMTF) are largely overlooked by U.S. investors because they trade OTC. They may only change price a few times per trading day due to a lack of buyers and sellers. That can result in buy or sell orders going through at suboptimal prices, or not going through at all. Limit orders can somewhat mitigate this risk.
Even large conglomerates like South Korea’s Hyundai (HYMTF) are largely overlooked by U.S. investors because they trade OTC. They may only change price a few times per trading day due to a lack of buyers and sellers. That can result in buy or sell orders going through at suboptimal prices, or not going through at all. Limit orders can somewhat mitigate this risk.A third way to invest in individual emerging market stocks is to open an account with a broker that allows Americans to trade directly on foreign stock exchanges. However, only a few brokers offer this feature, and those that do may have special requirements for would-be foreign stock traders.
A third way to invest in individual emerging market stocks is to open an account with a broker that allows Americans to trade directly on foreign stock exchanges. However, only a few brokers offer this feature, and those that do may have special requirements for would-be foreign stock traders.It’s also worth considering that you may be subject to the investment taxes and laws of the host country while investing directly in its stock market.
It’s also worth considering that you may be subject to the investment taxes and laws of the host country while investing directly in its stock market.You can check out our list of the best brokerage accounts for stock trading to learn more.
You can check out our list of the best brokerage accounts for stock trading to learn more.Neither the author nor editor owned positions in the aforementioned investments at the time of publication.
Neither the author nor editor owned positions in the aforementioned investments at the time of publication. Neither the author nor editor owned positions in the aforementioned investments at the time of publication. Frequently asked questionsEmerging markets are often poorer than advanced economies, but on a global scale, they’re upper-middle-income countries, for the most part.
Emerging markets are often poorer than advanced economies, but on a global scale, they’re upper-middle-income countries, for the most part.In economics terminology, countries with very low GDPs, such as Afghanistan or the Democratic Republic of the Congo, are referred to as “least-developed countries,” or LDCs.
In economics terminology, countries with very low GDPs, such as Afghanistan or the Democratic Republic of the Congo, are referred to as “least-developed countries,” or LDCs.Although LDCs may have the potential for rapid economic growth in the future, many are largely inaccessible (or extremely hazardous) to international investors today, due to some combination of lack of infrastructure, active conflict, or lack of a functioning legal or banking system.
Although LDCs may have the potential for rapid economic growth in the future, many are largely inaccessible (or extremely hazardous) to international investors today, due to some combination of lack of infrastructure, active conflict, or lack of a functioning legal or banking system.No — investing in emerging markets means investing in stocks from other countries, while forex involves trading the currencies of other countries.
No — investing in emerging markets means investing in stocks from other countries, while forex involves trading the currencies of other countries.Forex is a complicated and risky market that may not be appropriate for novice investors. But if you feel you’re capable of trying your hand at it, check out our list of the best forex brokers.
Forex is a complicated and risky market that may not be appropriate for novice investors. But if you feel you’re capable of trying your hand at it, check out our list of the best forex brokers .Emerging markets are often poorer than advanced economies, but on a global scale, they’re upper-middle-income countries, for the most part.
In economics terminology, countries with very low GDPs, such as Afghanistan or the Democratic Republic of the Congo, are referred to as “least-developed countries,” or LDCs.
Although LDCs may have the potential for rapid economic growth in the future, many are largely inaccessible (or extremely hazardous) to international investors today, due to some combination of lack of infrastructure, active conflict, or lack of a functioning legal or banking system.
No — investing in emerging markets means investing in stocks from other countries, while forex involves trading the currencies of other countries.
Forex is a complicated and risky market that may not be appropriate for novice investors. But if you feel you’re capable of trying your hand at it, check out our list of the
best forex brokers
.
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