Exchange Traded Funds The Shortlist

Research evidence excerpt

Exchange Traded Funds The Shortlist

Three ETFs worth watching

iShares Core MSCI Emerging Markets ETF (IEMG; 1-FV)

IEMG has 21% exposure to South Korea, while the Vanguard FTSE Emerging Markets

ETF (VWO; 1-FV) has none. With South Korean stocks up 271% since the start of 2025,

this difference has contributed to IEMG’s relative outperformance (Exhibit 4).

Investors wary of recent volatility in semiconductor stocks may rotate to VWO. David

Hauner, BofA’s global emerging markets strategist, remains structurally bullish on

emerging markets outside East Asia. Less than one year of inflows has not offset the

outflows recorded from 2015 through 2025, leaving global investors significantly

underexposed. Expected Fed hikes and a stronger dollar could pressure emerging

markets in the near term, but Hauner & team view any weakness as a potential buying

opportunity ahead of a more favorable environment in 2027.

Exhibit 3: Key stats for iShares MSCI Emerging Market ETF (IEMG) Exhibit 4: South Korea exposure drives IEMG’s outperformance

Market cap, dividend, beta, total returns, and expense ratio Cumulative total return: iShares Core MSCI Emerging Markets ETF (IEMG)

versus Vanguard FTSE Emerging Markets ETF (VWO)

iShares Emerging Markets

AUM ($bn) 153.77 75% iShares EM

Dividend yield (ttm) 2.25%

60% (IEMG) 5y Sortino 0.29

1y total return 35.3% 45% +61%

3y total return 71.3% Vanguard 30%

5y total return 40.5% EM (VWO)

Inception Date 10/22/2012 15% +40%

CAGR since inception 6.3% 0%

Expense ratio 0.09%

-15%

Source: BofA Global Research, Bloomberg Jan-25 Jun-25 Nov-25 Apr-26 Sep-26 BofA GLOBAL RESEARCH

Source: BofA Global Research, Bloomberg

BofA GLOBAL RESEARCH

VanEck Fallen Angels High Yield Bond ETF (ANGL; 1-FV)

ANGL owns bonds that were issued with investment-grade ratings but were