IEMG Is Widely Held, But Is It Still A Buy After 34% Run?

"The iShares Core MSCI Emerging Markets ETF ( NYSEARCA:IEMG) delivered a 34% return over the past year, crushing the S&P 500's 18% gain and drawing billions in fresh capital. But after such a run, is this still a buy, or have the easy gains been captured? With $117 billion in assets and a 0.09% expense ratio, IEMG tracks small, mid, and large-cap stocks across developing economies, with heavy concentration in China and Taiwan (nearly 48% combined), plus meaningful allocations to India, South Korea, Saudi Arabia, and Brazil."

"Currency moves are the biggest macro factor determining IEMG's 2026 performance. When the dollar weakens, emerging market assets become more attractive: local currency gains translate into larger dollar returns, and dollar-denominated debt becomes easier to service, improving financial stability. The dollar declined roughly 10% in 2025, providing a powerful tailwind. Currency strategists expect this weakness to continue into 2026, driven by narrowing interest rate differentials as the Federal Reserve maintains lower rates."

"Watch the Dollar Index (DXY), which measures the greenback against major currencies and typically moves inversely to emerging market performance. A sustained move below 100 would signal continued support for IEMG, while a rally above 105 could create headwinds. Check the index weekly, particularly during Federal Reserve meetings and major economic data releases."

IEMG returned 34% over the past year and outperformed the S&P 500, attracting significant inflows. The fund holds $117 billion with a 0.09% expense ratio and spans small-, mid-, and large-cap emerging-market stocks, with nearly 48% allocated to China and Taiwan and notable weightings in India, South Korea, Saudi Arabia, and Brazil. Strong demand for semiconductors and improving emerging-market fundamentals contributed to performance, amplified by a roughly 10% dollar decline in 2025. Future performance depends heavily on currency moves—DXY below 100 would support returns, while a rally above 105 could create headwinds—and China exposure remains a primary opportunity and risk.

Read at 24/7 Wall St.