How to invest in emerging markets on the ASX

Here’s an easy way to add some exotic shares.

| More on:
world's biggest companies represented by one person holding cityscape and another holding earth in hands

Image source: Getty Images

When it comes to share market investing, it’s relatively easy to buy ASX shares. Since we ah, live in Australia (I presume), any brokerage service operating here typically offers full access to the Australian share market and the shares on it. As you would expect.

But when it comes to overseas markets, the picture is a little cloudier. These days many brokerage services offer full access to the US markets. This makes sense, seeing as the ‘land of the free’ is also home to the largest financial market in the world, as well as top-tier companies like Apple Inc (NASDAQ: AAPL) and Inc (NASDAQ: AMZ).

But what of other markets? If you’re lucky you can find a broker that offers access to some other major share markets. These might be the European markets, or else the stock exchanges of London, Tokyo or Hong Kong, for example. But if you want to invest in the world’s emerging markets, the outlook is even cloudier again. Good luck trying to find an Australian broker that will offer share trading on the Argentinean stock exchange, for example. Or that of Russia, Mexico or Thailand. If they do, it will probably come with a very expensive price tag.

So how do you invest in emerging markets on the ASX?

So how does one simply and cheaply invest in emerging markets? These markets can be useful from a diversification standpoint, as well as offering access to some of the highest-growth economies of the world. Well, an exchange-traded fund (ETF) could be an option worth examining. The ASX is home to a couple of ETFs that cover emerging markets. There’s the Vanguard FTSE Emerging Markets Shares ETF (ASX: VGE). But the most popular is the iShares MSCI Emerging Markets ETF (ASX: IEM).

This ETF from iShares invests in more than 5,200 companies from various emerging economies around the globe. Its most prominent countries are China and Taiwan, housing 31.89% and 16.14% of the total fund’s holdings respectively. However, IEM also includes companies hailing from India, South Korea, Brazil, Russia, Saudi Arabia, South Africa, Mexico and Thailand, amongst others.

All of this can be available through a single ETF and ticker code. IEM isn’t the cheapest ETF on the market, but its annual management fee of 0.68% still arguably looks competitive against some managed funds’ fees. So if you’re after some emerging markets in your portfolio for diversification or a long-term growth play, ETFs might be the easiest (and even cheapest) path to explore.

Should you invest $1,000 in IEM right now?

Before you consider IEM, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and IEM wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Amazon and Apple. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

Broker looking at the share price on her laptop with green and red points in the background.
Share Market News

5 things to watch on the ASX 200 on Friday

The ASX 200 is expected to have a subdued finish to the week...

Read more »

Top 10 ASX shares today
Share Market News

Here are the top 10 ASX shares today

Here are your top 10 biggest gainers in the ASX 200 on Thursday.

Read more »

A man in a business suit and tie places three wooden blocks with the numbers 1, 2 and 3 on them on top of each other on a table. representing the most traded ASX 200 shares by volume today
Share Market News

These 3 shares are topping the ASX 200 volume charts on Thursday

We take a look at the most traded ASX 200 shares by volume today.

Read more »

a man sitting at a computer at a desk has a look of anguish and trepidation on his face as he opens his eyes wide and made an aargh type expression with his mouth as his hair stands on end and his tie also stands on end with one part over each shoulder in what is supposed to be a humorous picture of something in a panic.

Un-stable coin? Terra crypto woes continue with another 31% fall

I'd think very carefully before going bargain hunting among stumbling altcoins.

Read more »

two computer geeks sit across from each other with their laptop computers touching as they look confused and confounded by what they are seeing on their screens.
Technology Shares

What’s happening with ASX 200 tech shares today?

Growth shares are more sensitive to interest rate hikes as they're often priced with distant future earnings in mind.

Read more »

Red line going down on an ASX market chart which symbolises a falling share price.
Share Market News

ASX 200 midday update: Aristocrat’s earnings beat, Webjet flops, retailers smashed

The ASX 200 is deep in the red on Thursday...

Read more »

a couple sits on a sofa, each clutching their heads in horror and disbelief, while looking at the computer screen balanced on the lap of the man.
Share Market News

ASX 200 shares tumble following worst day on Wall Street in 2 years

Recession fears in the United States sparked a sharp selloff in equities.

Read more »

A nervous ASX shares investor holding her hands to her face fearing a global recession may occur
Share Market News

5 things to watch on the ASX 200 on Thursday

It looks set to be a bad day for the ASX 200 on Thursday...

Read more »