Investors are looking for opportunities in ex-U.S. equities. In January, flows into ex-U.S. international equities ETFs helped to break records as investors clamored for ways to diversify into cheaper stocks away from mega cap tech. Several ETFs have performed well amid this growing demand, suggesting further opportunities within the emerging markets sector. One smart beta ETF, in particular, offer a unique spin on this space and is proving to be a formidable performer.
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The Goldman Sachs ActiveBeta Emerging Markets Equity ETF (GEM) charges a 35 basis point fee for its smart beta approach. Thus far, the strategy has outperformed its ETF Database Emerging Markets Equities ETF Database category average over one and three year periods. It rose above $1 billion a few months ago and currently sits at $1.3 billion in AUM, according to ETF Database.
Since January, the fund has continued to outperform its category average. The hot start to 2026 has also seen its Relative Strength Index (RSI) drop closer to a buy opportunity. Adding an important multi-factor twist to the emerging markets space, the fund emphasizes stocks with durable momentum, high quality, good value, and low volatility.
What makes this multi-factor approach so effective for emerging markets? The strategy provides exposure to East Asian technology firms leading in major sectors such as semiconductors. Additionally, GEM offers exposure to equities in other notable emerging markets like India and other regions with leading emerging markets such as South America, specifically Brazil.
Emerging markets offer a diverse mix of high-upside opportunities ranging from India’s rising tech spaces, commodity companies in Africa, and e-commerce leaders in South America. Looking ahead, with many investors already allocated to developed market equities, emerging markets can provide a strategic addition. For investors looking at the emerging markets space, GEM may prove to be an intriguing option.
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