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iShares Core MSCI Emerging Markets ETF

IEMG:NYSE

equity ETF | passive | iShares (BlackRock, Inc.) | Tracks MSCI

Market Price

US$72.60 (26 Jan 2026)

+32.56% (YoY)

NAV

US$71.89

+0.98% Premium

Yield

2.75%

-47.51% (YoY)

Expense Ratio

0.09%

-82% vs Avg: 0.50%

Box Set (ETF)

⚡ Executive Summary

📊 The Bottom Line

This ETF invests in large-, mid-, and small-capitalization equities across global emerging markets, offering broad exposure to these growing economies. With a current market price of US$72.60 and NAV of US$71.89, it currently trades at a slight premium of 0.98%. The bull case projects the NAV could reach US$83.49 (+15%) while the bear case suggests a downside to US$62.44 (-14%), making it suitable for long-term growth-oriented portfolios.

⚖️ Risk vs Reward

Emerging market equities are currently trading at a P/E ratio of 17.35x, which is modestly above its benchmark, suggesting fair to slightly premium valuation compared to its historical averages. This valuation is notably lower than developed markets, offering a potential value proposition for investors seeking international diversification. While emerging markets generally offer higher growth potential driven by favorable demographics and industrialization, they also carry elevated risks such as geopolitical instability, currency fluctuations, and varying regulatory environments. The ETF's low expense ratio and broad diversification within the emerging markets help mitigate some fund-specific risks, but the inherent volatility of the underlying asset class remains a key consideration for the risk/reward profile.

🚀 Why IEMG Could Soar

• Sustained global economic growth, particularly in key developed markets, could drive demand for goods and services from emerging economies, boosting corporate earnings and valuations in the ETF's holdings.
• A weakening US dollar could benefit emerging market assets by making their exports more competitive and reducing the burden of dollar-denominated debt, leading to stronger equity performance.
• Continued domestic consumption growth in large emerging economies, supported by rising middle-class populations and urbanization, could provide a resilient earnings floor for the underlying companies.

⚠️ What Could Go Wrong

• Escalating geopolitical tensions, particularly concerning major emerging market economies like China, could trigger significant capital outflows and dampen investor confidence, impacting stock valuations.
• A stronger-than-expected US dollar or rising interest rates globally could put pressure on emerging market currencies and increase debt servicing costs for companies, leading to underperformance.
• Economic slowdowns in major emerging markets, such as China, could severely impact global supply chains and commodity prices, negatively affecting a significant portion of the ETF's diversified holdings.

🏢 Fund Overview

What Are You Actually Buying

This ETF provides exposure to a broad universe of large-, mid-, and small-capitalization companies located in global emerging markets, encompassing a wide range of industries and countries.
Emerging markets are characterized by developing economies with rapid industrialization, growing middle classes, and often higher growth potential compared to developed markets, though they may also exhibit greater volatility.
The underlying index aims to capture approximately 85% of the free float-adjusted market capitalization in 24 Emerging Markets countries, offering comprehensive coverage.

Market Dynamics & Outlook

Emerging market equities currently trade at a P/E ratio of 17.35x, slightly above the MSCI Emerging Markets Index's P/E of 17.03, indicating a broadly fair valuation relative to its benchmark.
While emerging markets generally offer higher growth prospects, they are also sensitive to global macroeconomic factors, including interest rate movements in developed economies, commodity price trends, and geopolitical stability.
Key drivers for emerging market performance include robust domestic demand, technological adoption, and infrastructure development, which can offset some external headwinds.

🎯 Why This Matters

Understanding the dynamic nature of emerging markets is crucial, as their growth potential comes with inherent sensitivities to global economic shifts and local policy changes. This ETF offers a diversified approach to access these markets, but investors must weigh the long-term growth opportunities against the potential for higher volatility and specific regional risks.

📈 Valuation & Analysis

Historical Performance

YTD

+6.76%

+32.10%

Yearly Growth (3Y)

+16.30%

Yearly Growth (5Y)

+4.60%

Yearly Growth (10Y)

+8.40%

Yearly Growth (Since Inception)

+5.09%

Current Valuation

The iShares Core MSCI Emerging Markets ETF's holdings trade at an aggregate price-to-earnings (P/E) ratio of 17.35x, as per the latest available data. This is marginally above the MSCI Emerging Markets Index's P/E of 17.03x as of December 31, 2025. The fund's price-to-book (P/B) ratio stands at 2.23x, also slightly higher than the index's 2.16x. These figures suggest that the ETF is priced at a modest premium relative to its underlying benchmark. Compared to its historical valuation, the current P/E of 17.35x is near the average for emerging markets over recent years, neither indicating extreme overvaluation nor deep undervaluation. The current yield of 1.60% (trailing annual dividend yield) offers some income potential, but the primary investment thesis for emerging markets remains focused on long-term capital appreciation driven by economic development.

The Bull Case - Upside to

Robust Emerging Market Economic Recovery

Medium Probability

If emerging market economies rebound strongly, driven by increased trade and domestic reforms, aggregate corporate earnings for IEMG's holdings could expand by 10-15% over the next 12-18 months. Coupled with a modest P/E expansion to 20x from 17.35x, this could lead to a NAV of US$83.49, representing a 15% upside.

Favorable Demographics and Consumption Growth

High Probability

Emerging markets benefit from younger populations and growing middle classes, fueling domestic consumption. A 5-7% acceleration in consumer spending could translate to a 8-10% uplift in revenue for consumer-oriented holdings, contributing to a 5-7% NAV increase.

Stabilization and Appreciation of Emerging Market Currencies

Medium Probability

If major emerging market currencies strengthen against the US dollar by 5-10%, it would directly increase the dollar-denominated value of IEMG's holdings, potentially adding 5-10% to the ETF's NAV over the next year.

The Bear Case - Downside to

Global Economic Slowdown and Recession Fears

Medium Probability

A significant global economic downturn could reduce demand for emerging market exports and negatively impact corporate profitability. A 10-15% decline in earnings and a P/E contraction to 15x could result in a NAV of US$62.44, representing a 14% downside.

Geopolitical Tensions and Trade Disruptions

High Probability

Escalating trade disputes or geopolitical conflicts, particularly involving large emerging market economies, could disrupt supply chains, deter foreign investment, and lead to a 5-8% reduction in the market values of affected companies, impacting the ETF's NAV.

Persistent Inflation and Higher Interest Rates

Medium Probability

If inflation remains stubbornly high in emerging markets, forcing central banks to maintain restrictive monetary policies, it could suppress economic growth and increase borrowing costs for companies, leading to a 7-10% decline in equity valuations.

Risk/Reward Assessment

The iShares Core MSCI Emerging Markets ETF presents a balanced risk-reward profile, with a potential upside of approximately 15% (NAV of US$83.49) in a bullish scenario and a downside of around 14% (NAV of US$62.44) in a bearish scenario. The bull case hinges on a robust global recovery, favorable demographics driving consumption, and a stable-to-weaker US dollar. These factors could provide tailwinds for emerging market equities, allowing for earnings growth and modest multiple expansion. Conversely, the bear case is largely influenced by external macroeconomic headwinds such as a global slowdown, continued geopolitical instability, and persistent inflationary pressures leading to tighter monetary policies. These risks could trigger a contraction in valuation multiples and negatively impact corporate earnings. Investors should consider their long-term conviction in emerging market growth against the backdrop of these significant macroeconomic and geopolitical risks. The broad diversification within the ETF helps mitigate single-country or single-company risks, but the overall asset class remains subject to pronounced cyclical swings.

Peer Comparison

The iShares Core MSCI Emerging Markets ETF (IEMG) stands out in the diversified emerging markets category for its extremely low expense ratio, offering a cost-efficient way to access a broad range of emerging market companies. This cost advantage is a significant long-term benefit, especially for buy-and-hold investors. It covers a broader market segment by including large-, mid-, and small-cap stocks, providing more comprehensive exposure than some peers that might focus solely on large- and mid-caps. While some peers might offer slightly higher yields or different regional tilts, IEMG prioritizes broad, low-cost market-cap-weighted exposure, making it an excellent core holding for international diversification. Its substantial assets under management also ensure strong liquidity and tight bid-ask spreads, which are crucial for efficient trading.

Fund	Expense Ratio	AUM (B)	1Y Return	3Y Return	5Y Return	Yield
iShares Core MSCI Emerging Markets ETF (IEMG) ⭐	0.09%	US$120.1B	32.10%	16.30%	4.60%	0.02%
Vanguard FTSE Emerging Markets ETF (VWO)	0.07%	US$12.0B	28.40%	14.71%	4.88%	0.03%
iShares MSCI Emerging Markets ETF (EEM)	0.72%	US$25.1B	37.90%	15.80%	3.50%	0.02%

🎯 Why This Matters

The valuation and peer comparison highlight IEMG's strength as a low-cost, broadly diversified entry into emerging markets. This makes it a suitable foundational component for long-term investors seeking exposure to developing economies. However, the performance and risk metrics of peers suggest that while IEMG is competitive on cost, investors should align their choice with specific index preferences (e.g., MSCI vs. FTSE) and desired market-cap exposure, as these can lead to differing return profiles and risk characteristics over time.

📊 Appendix

Top 10 Holdings (80+ of ETF Value)

#	Ticker	Logo	Name	Sector	Weight
1	2330	T	Taiwan Semiconductor Manufacturing Co Ltd	Technology	0.1%
2	005930	S	Samsung Electronics Co Ltd	Technology	0.0%
3	700	T	Tencent Holdings Ltd	Communication Services	0.0%
4	9988	A	Alibaba Group Holding Ltd	Consumer Cyclical	0.0%
5	000660	S	SK Hynix Inc	Technology	0.0%
6	HDFCBANK	H	HDFC Bank Ltd	Financials	0.0%
7	939	C	China Construction Bank Corp H	Financials	0.0%
8	RELIANCE	R	Reliance Industries Ltd	Energy	0.0%
9	2317	H	Hon Hai Precision Industry Co Ltd	Technology	0.0%
10	1810	X	Xiaomi Corp	Technology	0.0%

Fund Mechanics

How It Works

The iShares Core MSCI Emerging Markets ETF is a passively managed exchange-traded fund that seeks to track the investment results of the MSCI Emerging Markets Investable Market Index (IMI). This index is composed of large-, mid-, and small-capitalization equities from global emerging markets. The fund utilizes a representative sampling indexing strategy rather than full replication, meaning it invests in a selection of securities that collectively have an investment profile similar to that of the underlying index, rather than buying every single security in the index. This approach aims to reduce costs and manage liquidity while still striving for tight tracking. The index is market-cap-weighted and covers approximately 99% of the market capitalization of emerging market firms.

Holdings Breakdown

Number of Holdings

2680

Top 10 Concentration

27.8%

Top 20 Concentration

40.0%

Turnover Rate

Category	Weight	Description
Information Technology	0.3%
Financials	0.2%
Consumer Discretionary	0.1%
Industrials	0.1%
Communication Services	0.1%
Materials	0.1%
Health Care	0.0%
Consumer Staples	0.0%
Energy	0.0%
Utilities	0.0%
Real Estate	0.0%
Cash and/or Derivatives	0.0%
China	0.2%
Taiwan	0.2%
India	0.1%
South Korea	0.1%
Other Countries	0.3%

Cost Efficiency

Expense Ratio

0.09%

Median Bid-Ask Spread

0.010%

Metric	1 Year	3 Year	5 Year
Tracking Error	N/A	N/A	N/A
Tracking Difference	0.74%	0.03%	-0.06%

Expense Ratio History

Year	Expense Ratio
2025	0.09%
2024	0.09%
2023	0.09%
2022	0.09%
2021	0.09%

Performance History

Year	ETF Return	Benchmark Return	Tracking Diff	Volatility	Max Drawdown	Sharpe Ratio
2025	32.12%	31.38%	0.01%	15.42%	-34.34%	0.83
2024	6.92%	7.09%	-0.00%	15.42%	-34.34%	0.83
2023	11.31%	11.67%	-0.00%	15.42%	-34.34%	0.83
2022	-19.87%	-19.83%	-0.00%	15.42%	-34.34%	0.83
2021	-0.64%	-0.28%	-0.00%	15.42%	-34.34%	0.83

Annualized Return Since Inception

5.09%

Detailed Peer Comparison

Ticker	Name	Issuer	Exp Ratio	AUM (B)	1Y	3Y	5Y	Yield	StdDev 3Y	Sharpe 3Y	Spread
IEMG ⭐	iShares Core MSCI Emerging Markets ETF	iShares	0.09%	US$120.1B	32.1%	16.3%	4.6%	0.02%	12.90%	0.83	0.010%
VWO	Vanguard FTSE Emerging Markets ETF	Vanguard	0.07%	US$12.0B	28.4%	14.7%	4.9%	0.03%	N/A	N/A	N/A
EEM	iShares MSCI Emerging Markets ETF	iShares	0.72%	US$25.1B	37.9%	15.8%	3.5%	0.02%	13.42%	0.80	N/A
Category Average			0.50%	—	0.3%	0.2%	0.1%	0.03%	—	N/A	—

Risk Metrics

Beta

0.96

R-Squared

0.75

Standard Deviation

1 Year	3 Years	5 Years	10 Years
0.16%	0.13%	0.15%	0.17%

Sharpe Ratio

1Y	3Y	5Y	10Y
2.32	0.83	0.25	0.52

Sortino Ratio

3 Years	5 Years
N/A	N/A

Maximum Drawdown

1 Year	3 Years	5 Years	Since Inception
-0.18%	-0.18%	-0.24%	-0.34%

Correlations

Liquidity & Trading

Volume

Avg Daily Shares

14,283,693

Avg Daily Dollar Volume

US$1036.4M

Trend

increasing

Bid-Ask Spread

Metric	Value
Median (Percent)	0.010%
Median (Dollar)	US$0.01
During Hours	N/A
At Close	N/A
Volatility	N/A

Premium/Discount to NAV

Metric	Value
Current	0.98%
30-Day Average	0.40%
1-Year Average	0.70%
Standard Deviation	N/A
Max Premium (1Y)	N/A
Max Discount (1Y)	N/A

Creation/Redemption Activity

Trend

Not available

Net Flows

Period	Net Flow
1 Year	US$25240.0M

⚠️ Disclaimer: This ETF research report is for informational and educational purposes only. It does not constitute investment advice, a recommendation, or an offer to buy or sell securities. EC² Invest is not a registered investment advisor. All data is sourced from public sources and may contain errors. Past performance does not guarantee future results. ETF investing involves risk, including possible loss of principal. Always conduct your own research and consult with a qualified financial professional before making investment decisions.