Are funds for emerging markets overly concentrated in East Asia?

Nowadays, the MSCI Emerging Markets Index serves as a stand-in for a single region and, more and more, a single industry

How can you be exposed to more conventional media?

In the financial world, the most important factor is whether or not the stock market is included in the MSCI Emerging Markets (EM) index. You can argue over various metrics of economic development and income levels as the cut-off point.

As we've mentioned a few times in recent weeks, the AI boom is beginning to stretch this line of thinking. The index is becoming more and more tech-heavy due to the performance of a few stocks that are essential to the semiconductor industry (now 43 percent of the total). It has nearly 50% in Taiwan and Korea, two economies that are obviously developed and prosperous. However, the underlying point has been true for much longer, even though AI's influence on the index has made this very evident. According to MSCI's market-access criteria, Korea and Taiwan are "emerging," but they have already reached full economic emergence.

Is China considered an emerging market?

You are capable of more. With a weight of roughly 20%, China is the third largest. In terms of purchasing power parity (PPP), China's GDP per capita is still firmly in emerging market territory; it is roughly half that of the UK, for instance, but this masks the stark differences between the wealthier coastal provinces and those farther inland. In nominal terms, it is also by far the second-largest economy in the world. How much of it fits the definition of a traditional emerging market?

The EM index keeps a close eye on Asia.

Keep in mind that all three of these nations make up nearly 70% of the index. The chart above indicates that there isn't much of a difference between the MSCI EM and the little-quoted MSCI AC Asia, which includes neighboring Japan.

An actual emerging market exchange-traded fund.

The pragmatic investor might be content. It's crucial to comprehend where returns are coming from, how an end to the AI boom might change this, and what your options are if you want more conventional emerging market exposure. After all, if returns are good, why worry about definitions?

Barings EMEA Opportunities (LSE: BEMO) and BlackRock Frontiers (LSE: BRFI) have already been mentioned. Both are intriguing, but neither is comprehensive (BRFI leaves out the eight biggest emerging markets, while BEMO covers Eastern Europe, the Middle East, and Africa).

Alternatively, we might consider WisdomTree True Emerging Markets (LSE: WEMP), a relatively new exchange-traded fund (ETF). China, Korea, and Taiwan are dropped, leaving Brazil and India in the top spots. You get a traditional emerging-markets portfolio with over 35 percent in financials and very little technology.

As a stand-alone holding, this seems excessive for the majority of investors. It may be better to limit exposure to the big three. However, having this in addition to a traditional EM fund would be one way to increase portfolio balance.