Two $160 billion EM funds are 11 percentage points apart. Korea is why
In the week ended Friday, September 4, the iShares Core MSCI Emerging Markets ETF rose 2.2% and is up 25.4% year to date; the Vanguard FTSE Emerging Markets ETF rose 1.1% and is up 14.4%.
MSCI still counts South Korea as an emerging market. FTSE counts it as developed. That single classification is why two funds of almost the same size, with almost the same name, are 11 percentage points apart in 2026.
The iShares Core MSCI Emerging Markets ETF IEMG, $161 billion of large-, mid-, and small-cap EM, rose 2.2% this week and is up 25.4% year to date. Technology is 39% of the fund.
The Vanguard FTSE Emerging Markets ETF VWO, $162 billion against the FTSE Emerging Markets All Cap China A Inclusion Index, rose 1.1% and is up 14.4% year to date. Technology is 29%. Tencent and Alibaba weigh more than they do in IEMG. The Vanguard fund owns more China and no Samsung. The iShares core fund owns both.
Take China out of the MSCI book and the iShares MSCI Emerging Markets ex China ETF EMXC, $25 billion, is up 40% year to date after a 3.0% week. Technology is 50% of it. It is a Korea-and-Taiwan megacap fund with a residual.
Chart: VWO holds **no** Samsung or SK Hynix
The week ranked the field the same way 2026 has: by how much China the index forced into the portfolio, and by whether it considers Seoul emerging.
Total returns, Friday, August 28 close through Friday, September 4 close.
Hong Kong banks, not the PMI
China's factories had a better August. They did not leave contraction. The National Bureau of Statistics said Monday that the official manufacturing PMI rose 0.6 percentage points to 49.8, with new orders back at 50.6. Non-manufacturing activity, the closer read on services and construction, stayed at 49.0. A private RatingDog survey printed 51.5. The official print is the one that still sits under 50.
The Hang Seng Index spent four sessions going nowhere, then rose 1.7% on Friday to 25,650.90. For the week it was up 0.3%, and it is up 0.1% year to date.
The iShares MSCI China ETF MCHI, the broad overseas-listed China book, fell 0.6% for the week and is down 8.0% year to date. Tencent, 13.6% of the fund, dropped 2.7% and subtracted 0.37 percentage points. Alibaba dropped 3.3% and took another 0.31. China Construction Bank and Bank of China rose 6.8% and 8.8%, not enough to offset the internet names.
The iShares China Large-Cap ETF FXI is a 50-stock Hong Kong list with 35% in financials. China Construction Bank is 9.5% of it, against 4.1% in MCHI. That overweight was the week: the fund rose 1.0%. Beijing did not add a stimulus announcement this week.
Brazil took the oil; India did not
West Texas Intermediate rose 9.7% for the week, from $83.40 to $91.48. Reuters reported that U.S. crude jumped 5.2% on Tuesday as U.S. and Iranian forces resumed strikes. Brent closed at $96.28, up 9.3%.
The iShares MSCI Brazil ETF EWZ rose 6.5%, the week's largest single-country move among the major EM wrappers. The Ibovespa itself gained 5.4%, from 175,665 to 185,147, before flattening on Thursday and Friday. Nu Holdings added 0.69 percentage points, Petrobras preferred 0.59, and Itaú Unibanco preferred and Petrobras common 0.53 each. Petrobras preferred shares rose 8.2%.
The iShares MSCI India ETF INDA rose 0.7% and is down 7.7% year to date. Brazil's oil names moved with crude. India did not.
Brazil tracked the oil spike; India did not
- EWZ · 37.86
- INDA · 49.91
- WTI · 91.48
The iShares MSCI South Korea ETF EWY rose 4.8%; the KOSPI fell 1.5%, including a 4.0% drop on Wednesday. The stocks it holds, covering 99.5% of assets, summed to a 1.5 percentage-point decline. Samsung Electronics, 22.3% of the fund, was slightly down. SK Hynix is the largest line at 23.9%. Friday's 4.6% jump in the U.S.-listed fund did most of the week's work. On Wednesday, the last session with a published NAV, the shares closed 0.15% below the value of the holdings. Year to date the fund is up 94.3% and the KOSPI 59%.
The iShares MSCI Taiwan ETF EWT rose 4.0%; the TAIEX rose 0.5%. MediaTek gained 10.8% and added 0.69 percentage points. TSMC, 22% of the fund, was slightly down.
Hard-currency EM debt did not join the equity tape. The iShares J.P. Morgan USD Emerging Markets Bond ETF EMB was flat on a total-return basis after a $0.41368 monthly distribution went ex on Tuesday. VanEck's local-currency government-bond fund EMLC rose 0.7%. The U.S. 10-year yield ended Friday at 4.78%, the 2-year at 4.37%.
Payrolls first, Beijing later
The dollar index slipped 0.5% for the week, from 99.70 to 99.16. Friday's U.S. session took some of that back. Nonfarm payrolls rose 162,000 in August, unemployment held at 4.1%, and the S&P 500 fell 0.4% to 7,718.60.
What comes next is the CPI report, then the Federal Open Market Committee on September 15-16. A 49.8 manufacturing PMI, a services index still at 49, and a Hang Seng that is unchanged on the year will not make MCHI look like EMXC. Korea in the benchmark, and China out of it, already did that work this year.
Frequently asked
Why is there a performance gap between the two largest emerging market ETFs?
One index provider classifies South Korea as an emerging market, while the other counts it as a developed market.
How did China affect emerging market fund returns?
Lagging Chinese internet companies dragged down broader indexes, while funds that excluded China entirely outperformed.
Why did Brazilian stocks outperform Indian stocks?
Brazil's major oil equities rallied alongside rising crude prices, whereas Indian stocks did not track the oil spike.