Aggressive · Stocks to Consider and Updates

The iShares Emerging Markets Fund – Update

The iShares Emerging Markets ETF (NYSE: EEM – $46.93) tracks the market-cap-weighted MSCI Emerging Markets Index, which includes over 800 large-and mid-cap stocks across 24 non-developed markets. The fund generally invests at least 90% of its assets in the securities and depository receipts of its underlying index. It effectively diversifies firm-specific risk, promotes low turnover and accurately represents its target market. The ETF holds emerging market stocks that can predominantly be classified as large and mid-cap. It weights the holdings using a market capitalization method and re-balances quarterly. However, the fund has significant exposure to Chinese stocks, which currently account for nearly 28% of the portfolio. Over the past year, the EEM has risen about 30% and provides a dividend yielding 1.28%. The passively managed fund’s expenses are somewhat above average at 0.72%, but provide a relatively safe approach for risk-tolerant investors to capitalize on what are considered undeveloped markets throughout the world. The basket of holdings totals 996 companies, with Asian and Latin American companies representing 82%. The fund is also over-weighted in information technology and financial companies operating in these markets. The top ten holdings represent about 25% of the total portfolio.

       I initiated coverage of EEM in May 2014. Since then it has delivered a 10% increase in price along with the annual 1.3% yielding dividend. Not without currency and market risk, I am maintaining an over-weighted 13% allocation in this fund for the aggressive account, as I believe there is considerable value for stocks represented in this fund and positions provide investors with wide exposure to developing economies around the globe.

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