Best Emerging Markets ETF : MSCI EM vs FTSE EM, live comparison
How to pick an Emerging Markets ETF ? Comparison of funds (AEEM, EIMI, PAEEM, PLEM), MSCI EM vs FTSE EM differences, China share, dividend tax friction, detailed FAQ.
The MSCI Emerging Markets index in brief
The MSCI Emerging Markets tracks about 1,400 companies listed in 24 countries classified as "emerging" by MSCI : China, India, Taiwan, South Korea, Brazil, Mexico, South Africa, United Arab Emirates, Poland among others. Its capitalization covers roughly 85% of the free-float capitalization of emerging markets.
Weighting is by free-float capitalization. China and Taiwan dominate (around 60% combined), followed by India and South Korea. The top 10 includes TSMC, Tencent, Samsung, Alibaba, Reliance Industries.
The MSCI Emerging Markets is the classic geographic complement to an MSCI World or FTSE Developed : it covers precisely the zones these indices exclude. Overlap with an MSCI World ETF is very low (under 5%), making it a true diversification tool.
Comparison of available MSCI Emerging Markets ETFs
Data from our live database. The displayed TER is the annual management cost ; AUM represents assets under management.
| Ticker | Issuer | TER | Distribution | PEA |
|---|---|---|---|---|
| EIMI iShares Core MSCI EM IMI UCITS ETF USD (Acc) | BlackRock | 0.18 % | Accumulating | — |
| PAEEM Amundi PEA MSCI Emerging Markets UCITS ETF EUR (C) | Amundi | 0.20 % | Accumulating | PEA |
| AEEM Amundi MSCI Emerging Markets UCITS ETF EUR (C) | Amundi | 0.20 % | Accumulating | — |
| PLEM Amundi PEA Emergent EMEA (MSCI Emerging EMEA) ESG Transition UCITS ETF Acc | Amundi | 0.55 % | Accumulating | PEA |
MSCI Emerging Markets ETF rankings
Descriptive rankings computed on live data : fund size (assets under management) and listed fees (TER). Each criterion tells a different story : the largest is not always the cheapest.
Largest by AUM
Ranked by assets under management
Cheapest by TER
Ranked by ascending TER
MSCI EM, FTSE EM or MSCI EM IMI : what differences for a European investor
Three indices coexist for emerging markets. The MSCI Emerging Markets (reference for Amundi, BNP, Invesco) covers large and mid caps across 24 countries. The FTSE Emerging Markets (used by Vanguard) covers 24 countries but classifies South Korea as developed, and includes a few countries excluded by MSCI.
The MSCI Emerging Markets IMI (Investable Market Index) also covers 24 countries but adds small caps, bringing the line count to about 3,000. The iShares Core EIMI replicates this IMI version.
For nearly all diversified portfolios, the performance differential between MSCI EM and FTSE EM stays below 1% per year : the choice mostly comes down to availability (PEA or CTO), TER and AUM.
Overlap between ETFs tracking the MSCI Emerging Markets
When several ETFs track the same index, their overlap is mechanically very high. The matrix below computes the real overlap from current holdings (with physical proxy resolution for PEA-eligible synthetic ETFs).
Criteria to differentiate them
When overlap between two ETFs tracking the same index exceeds 95%, the following criteria become the actual differentiators.
Listed TER and compounded cost
Total Expense Ratio is deducted yearly from the fund's assets. Over 20 years, the gap between a 0.07% and 0.38% TER represents several thousand euros on a €50,000 investment, all else being equal.
Replication method
Physical replication directly holds the index securities. Synthetic replication uses a swap : a counterparty commits to deliver the index performance. Synthetics are required to make non-EU equity ETFs eligible for the French PEA.
PEA eligibility and proxy mechanism
A PEA-eligible synthetic ETF holds European equities (to satisfy the PEA quota) and receives the target index performance via swap. To compute real overlap, our tool resolves each synthetic to its reference physical ETF tracking the same index.
AUM and liquidity
High AUM (above €500M) typically ensures tight bid/ask spreads and a low fund closure probability. Very small ETFs (below €50M) carry a liquidation risk.
Listing currency and distribution policy
An ETF listed in USD with an EUR/USD hedge has an implicit hedging cost. A distributing (D) ETF pays dividends to the cash account ; an accumulating (C) ETF reinvests them automatically. Within the French PEA the taxation is unaffected ; in a standard brokerage account distribution triggers withholding tax.
Per tax wrapper
In PEA (French tax wrapper)
Several MSCI Emerging Markets ETFs are PEA-eligible via synthetic replication (AEEM, PAEEM, PLEM). As with the MSCI World, they hold a basket of European equities and sign a swap to deliver emerging markets performance.
AUM is a key criterion here : emerging markets PEA ETFs have smaller AUM than their CTO equivalents, which can widen the bid/ask spread on large orders. Checking AUM in the table above helps avoid illiquid funds.
In a standard brokerage account
In a standard brokerage account, iShares physical ETFs (EIMI) replicate the MSCI EM IMI index by directly holding several hundred to several thousand securities. The TER (around 0.18%) remains higher than a physical MSCI World ETF since emerging market replication costs (brokerage fees, local taxes, liquidity constraints) are structurally higher.
Emerging market dividend taxation is complex : some countries withhold non-recoverable taxes at source. This "fiscal friction" can represent 0.2% to 0.4% per year of tracking difference beyond the listed TER.
Our MSCI Emerging Markets podium
Multi-criteria global ranking on 7 weighted criteria : TER, AUM, share price, 1Y performance vs peers, replication vs index, accumulating vs distributing, track record. Methodology detailed at the bottom of the block.
Amundi PEA MSCI Emerging Markets UCITS ETF EUR (C)
Amundi MSCI Emerging Markets UCITS ETF EUR (C)
iShares Core MSCI EM IMI UCITS ETF USD (Acc)
Ranking methodology
Global score out of 100 computed from 7 weighted criteria, aggregated from the ETF Overlap live database. Synthetic and physical ETFs are scored on the same grid.
- TER (30%) : lower is better, normalized on the range observed for this index.
- AUM (25%) : assets under management, log scale to avoid crushing mid-sized ETFs.
- Track record (10%) : number of years since launch, normalized.
- Share price (10%) : lower is better. A low unit price (e.g. €5 for WPEA vs €640 for CW8) makes regular investments (DCA) easier and reduces order rounding friction.
- 1Y performance vs peers (10%) : 12-month gross performance ranked across all ETFs tracking the same index. Top performer scores 100, lowest scores 0. Computed from closing prices in our base.
- Replication vs index (10%) : distance to the pool median performance, used as a proxy for the index return. An ETF whose return drifts significantly above or below the median reflects looser replication (hedging, aggressive sampling, hidden costs). 100 = on median, 0 = maximum observed deviation.
- Accumulating vs distributing (5%) : 100 for accumulating ETFs (acc), 0 for distributing (dist). Accumulating reinvests dividends automatically and avoids annual dividend taxation in standard brokerage accounts.
This ranking is a multi-criteria synthesis, not a personalized recommendation. It depends on the freshness of AUM, TER, price and performance data in our base.
Frequently asked questions
MSCI EM or FTSE EM : which to choose ?
Both indices cover broadly the same countries. The main difference : FTSE classifies South Korea as developed (absent from FTSE EM), MSCI treats it as emerging (present in MSCI EM at about 10%). The long-term performance gap stays limited. The choice mostly depends on the ETFs available in your wrapper and their TER.
Is an Emerging Markets ETF needed alongside an MSCI World ETF ?
The MSCI World excludes emerging markets by definition. Adding an MSCI EM ETF broadens geographic diversification from 23 to 47 countries. Classic allocations vary between 10% and 25% emerging, but no optimal weight exists : it depends on risk profile and investor convictions. Overlap between MSCI World and MSCI EM is below 5% : they are true complements.
Why is an MSCI EM ETF more expensive than an S&P 500 ETF ?
Three reasons : (1) replicating an emerging index requires managing several hundred to several thousand lines on less liquid markets, (2) local arbitrage and brokerage costs are higher, (3) competition on emerging market ETFs is less intense, maintaining higher margins for issuers. Typical TER : 0.18% to 0.55% versus 0.03% to 0.20% for the S&P 500.
What share of China in an MSCI Emerging Markets ETF ?
Around 25% to 30% in 2026, down from the 40% peak reached in 2020. This weight includes both H-shares (Hong Kong) and A-shares (yuan-listed in mainland China, progressively integrated by MSCI since 2018). For an investor wanting to minimize China exposure, MSCI EM ex-China ETFs exist but are scarce in Europe.
Are emerging markets riskier ?
Statistically, emerging markets volatility is roughly 5 points higher than developed markets. Specific risks include currency fluctuations, political instability, variable corporate governance. In return, expected economic growth is generally higher. Over the long term, the emerging/developed risk-return couple has narrowed since 2010.
Are there sector-specific Emerging Markets ETFs ?
A few thematic emerging ETFs exist (consumer, ESG, smart beta) but their AUM stays low. For most allocations, a broad MSCI EM or FTSE EM ETF suffices. Emerging sub-themes (frontier markets, ASEAN, India only) imply more expensive and less liquid trackers.
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