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Vanguard FTSE Emerging Markets ETF (VWO) – Latest Chart & Outlook

Sam Boughedda trader
Updated 17 Jan 2025

The Vanguard FTSE Emerging Markets ETF (VWO) invests in stocks of companies located in emerging markets such as China, Brazil, Taiwan, and South Africa, giving investors broad exposure to economies and stocks with high growth potential and expanding consumer bases.

Vanguard FTSE Emerging Markets ETF (VWO) Price and Chart

Launched in 2005, VWO seeks to track the performance of the FTSE Emerging Markets All Cap China A Inclusion Index, which comprises large, mid, and small-cap constituents from emerging-market countries.

Emerging markets are known for their dynamic economies, driven by rapid industrialisation, demographic shifts, and rising middle-class populations. The VWO ETF provides access to a wide range of sectors, including technology, financial services, and consumer goods, and holds prominent companies such as Taiwan Semiconductor Manufacturing Company (TSMC), Tencent, and Alibaba.

At the end of 2024, the Vanguard FTSE Emerging Markets ETF’s total net assets were $109 billion.

Vanguard FTSE Emerging Markets ETF (VWO) Performance

Emerging markets have experienced mixed performance in recent years, influenced by geopolitical tensions, global trade dynamics, and fluctuations in commodity prices. As a result, the ETF’s performance has also varied.

YearPerformance
2024 (YTD)+11.22%
2023+9.27%
2022-17.99%
2021+1.30%
2020+15.19%

VWO Top Holdings (End 2024)

Company% of Fund
Taiwan Semiconductor Manufacturing8.41%
Tencent Holdings3.60%
Alibaba Group2.32%
Meituan Dianping Class B1.49%
HDFC Bank1.29%
Reliance Industries1.17%
PDD Holdings0.95%
Hon Hai Precision Industry Co. 0.85%
Infosys0.82%
China Construction Bank Corp. Class H0.81%

Emerging Markets Forecast

There are varying perspectives on the future of emerging markets, reflecting the sector’s inherent risks and opportunities:

Bull Argument: Despite headwinds, many analysts believe emerging markets are poised for long-term growth driven by demographic trends, urbanisation, and increasing consumer demand. In an October article, Family Wealth Report, citing fund managers speaking at a recent press briefing, said, “EM may be due for a reversal of fortune sooner rather than later.” Sherry Zhang, a portfolio manager and analyst for Barrow Hanley, reportedly said that “emerging markets look very attractive right now.” Meanwhile, in a recent interview with CNBC, Malcolm Dorson of Global X highlighted the emerging markets that have the biggest runway for growth, pointing to Argentina as an area where they are seeing the “most momentum in the world.”

Bear Argument: Despite the optimistic outlooks, risks do still remain in emerging markets, including political instability, currency fluctuations, and exposure to global economic slowdowns. JPMorgan recently said that emerging markets could face a tough and uncertain year following US policy shifts and uncertain growth in China. “EM growth faces significant uncertainty in 2025, caught between two giants – China and the U.S. – with policy changes in the latter potentially delivering a large negative supply shock that will have spillovers across EM,” JPMorgan reportedly stated. 

Our View:  The Vanguard FTSE Emerging Markets ETF is an efficient way to invest in the growth potential of emerging economies. While risks are inherent in these markets, VWO’s diversified approach mitigates single-country or sector exposure, making it a tempting choice for long-term investors. However, investors should be prepared for heightened volatility and geopolitical uncertainties.

Who Should Buy the Vanguard FTSE Emerging Markets ETF?

While investors may be tempted to invest in an asset based on bullish commentary, it is important to make sure that it aligns with their investment goals and criteria. Here’s who may be suited to investing in the VWO ETF:

Long-term investors seeking exposure to high-growth regions may be suited to the ETF because they can ride out the volatility and capitalise on the structural transformations shaping these economies.

It goes without saying, but those looking to diversify their portfolios geographically, particularly outside of developed markets, may also find the VWO ETF more attractive.

Furthermore, if you want to invest in the Vanguard FTSE Emerging Market ETF or other emerging market ETFs, for that matter, you should have a higher risk tolerance, given the volatility of emerging markets.

On the other hand, risk-averse investors will probably want to avoid the ETF as emerging markets are prone to political and economic instability.

In addition, income-focused investors may find more attractive options elsewhere since dividend yields in emerging markets can be inconsistent and lower compared to developed markets.

Emerging Markets ETFs Comparison

Sam is a trader and lead stock market writer at AskTraders. After starting his career in the forex market, Sam now focuses on stocks, specifically consumer staples. 
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