What EEM actually is

EEM follows the MSCI Emerging Markets Index, which covers large and mid-sized companies from developing economies. These countries often grow faster than developed ones, but with more volatility.

What is inside

Large weights in technology, financials and consumer companies in places such as China, India, Taiwan, South Korea and Brazil. Semiconductor makers and big internet firms are among the biggest holdings.

Distributions

EEM pays dividends, usually twice a year, and the amount depends on foreign companies and exchange rates. The yield is moderate and can change a lot from year to year.

What to keep in mind

  • Political risk. Governments can change rules suddenly.
  • Currency swings. Emerging currencies can fall sharply.
  • Concentration. A few countries and companies dominate.
  • Governance. Minority shareholder rights can be weaker.

Quick take

EEM is a direct way to own emerging-market growth, with risks that suit only the long term and a small part of a portfolio.