Investing in emerging markets can help diversify a portfolio, but it can be a challenge to research, buy, and sell such stocks. Exchange-traded funds offer an easy way to gain exposure to emerging markets while minimizing those difficulties.
Here are the best five emerging-market stock ETFs, as evaluated by Morningstar analysts:
- BMO MSCI Emerging Markets ETF ZEM
- Vanguard FTSE Emerging Markets All Cap Index ETF VEE
- iShares MSCI Minimum Volatility Emerging Markets ETF XMM
- iShares Core MSCI Emerging Markets IMI ETF XEC
- iShares ESG Aware MSCI Emerging Markets ETF XSEM
All five are index funds, four of which track variations on the MSCI Emerging Markets Index.
Screening for the Best Canadian Emerging-Market Stock ETFs
We screened the 25 ETFs in the emerging markets equity category for those with Medalist Ratings of Gold, Silver, or Bronze that are 100% assigned by our analysts, rather than indirectly or quantitatively assigned, meaning we expect them to outperform their categories’ index or median over the long term.
Here’s a closer look at the funds. A table with their recent performance is at the end of this article.
BMO MSCI Emerging Markets ETF
- Morningstar Medalist Rating: Bronze
- Morningstar Rating: ★★★★
This C$1.9 billion fund tracks the MSCI Emerging Markets Index, which invests in large- and mid-cap stocks from 24 emerging markets. The fund holds about 800 stocks that aim to be a representative sampling of the more than 1,200 in the index. “The index targets stocks landing in the top 85% as ranked by their free-float-adjusted market cap,” says Morningstar manager research analyst Lan Anh Tran.
Vanguard FTSE Emerging Markets All Cap Index ETF
- Morningstar Medalist Rating: Bronze
- Morningstar Rating: ★★★
The C$3.2 billion Vanguard FTSE Emerging Markets All-Cap Index ETF tracks the FTSE Emerging Markets All Cap China A Inclusion Index. It tracks the index by holding the US-based Vanguard FTSE Emerging Markets ETF.
This index is similar to the MSCI Emerging Markets Index, but it also includes small-cap stocks, with a cutoff of stocks within the top 98% of funds by market cap. In addition, the FTSE Index holds stocks from Iceland and Romania and excludes stocks from South Korea, Peru, and Poland. The fund holds close to 5,000 different stocks. With a management expense ratio of 0.25%, it’s the cheapest of these funds.
iShares MSCI Minimum Volatility Emerging Markets Index ETF
- Morningstar Medalist Rating: Silver
- Morningstar Rating: ★★
The C$96 million iShares MSCI Minimum Volatility Emerging Markets Index ETF tracks the MSCI Emerging Markets Minimum Volatility Index, which uses a mathematical model called an optimizer to create a more defensive portfolio out of stocks in the index. It does so by finding stocks with lower volatility while restricting how far it can differ from the underlying index’s country, stock, and sector weightings. It tracks this by holding the $3.8 billion iShares MSCI Emerging Markets Minimum Volatility Factor ETF EEMV. The US-based fund holds 320 stocks.
“These guardrails may prevent the index from building the most defensive portfolio possible, but they make sure that no unintended bets compromise the low-volatility focus. That’s a worthy tradeoff,” writes Morningstar analyst Ryan Jackson. “So far, the index has delivered on its goals. Its returns were roughly 25% less volatile than the MSCI Emerging Markets Index over the 10 years through April 2025. That kept its risk-adjusted performance within striking distance of the parent index despite weaker returns.”
iShares Core MSCI Emerging Markets IMI ETF
- Morningstar Medalist Rating: Bronze
- Morningstar Rating: ★★★
The C$3.0 billion iShares Core MSCI Emerging Markets IMI ETF tracks the MSCI Emerging Markets Investable Market Index. The investable market index differs from the regular MSCI Emerging Markets Index, as it also includes small-cap stocks, with holdings covering the top 99% of market capitalization in the markets it invests in. The fund holds more than 3,000 stocks.
iShares ESG Aware MSCI Emerging Markets ETF
- Morningstar Medalist Rating: Bronze
- Morningstar Rating: ★★★
The C$4.6 billion iShares ESG Aware MSCI Emerging Markets ETF is the largest fund on the list, and the only one that utilizes environmental, social, and governance characteristics in its investment decisions. It tracks the MSCI Emerging Markets Extended ESG Focus Index, which holds over 300 stocks. The index uses a mathematical model called an optimizer to invest in stocks with as high ratings in ESG characteristics as it can while still maintaining a roughly 1% tracking error to the MSCI Emerging Markets Index.
“Sector and country weightings must stay within 5 percentage points of their original weightings in the parent index, while individual stocks must stay within 2 percentage points,” says Tran.
