Ex-U.S. equities have been a bright spot for portfolios this year, offering a source of return as U.S. markets have faced volatility. Entering 2025, many investors were already moving to add ex-U.S. stocks to address a recent underwriting trend; Liberation Day and further tariffs have added to that momentum. One leading emerging market ETF — GEM — has stood out with its performance, and may be poised to stand out in 2026, as well.
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The Goldman Sachs ActiveBeta Emerging Markets Equity ETF (GEM) charges a 45 basis point fee for its approach. The fund tracks a multifactor index that leans on proprietary research to identify stocks with low volatility, good value, high quality, and momentum.
Emerging Market ETF GEM on the Rise
The smart beta emerging market ETF has taken that approach and provided some strong performance for investors. The ETF has returned 30.8% YTD, according to ETF Database. That has also outperformed its ETF Database Category average, which comes in at 24.7% in that time.
What’s more, the emerging market ETF has also outperformed over one- and three-year periods. That has helped the fund increase over $1 billion in AUM this year. So, what role could the fund play for investors in the near and medium terms? As a leading emerging market ETF, it can offer diversification in addition to performance.
Its portfolio includes firms like SK Hynix, the South Korean chip manufacturer that has returned a remarkable 253% YTD. In addition to other key companies from East Asia, GEM also has a healthy allocation to India and South America equities, as well.
Together, its broad diversification and exposure to top-tier emerging market firms could make the ETF one to watch. Domestic uncertainty around interest rates, as well as a significantly weakening dollar could see foreign equities stand out in 2026, as well. For those looking at emerging market ETF options, GEM may appeal.
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