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Best Emerging Market ETFs in Canada (2026)

Updated

If you are choosing where emerging markets fit in the bigger picture, start with our ETFs and index funds hub.

Best Emerging Market ETFs on the TSX

ETF Ticker MER Yield Holdings Top Country Distribution
iShares Core MSCI Emerging Markets XEC 0.28% ~2.5% 1,400+ China ~28% Semi-annual
Vanguard FTSE Emerging Markets All Cap VEE 0.24% ~3.0% 5,600+ China ~30% Quarterly
BMO MSCI Emerging Markets ZEM 0.29% ~2.5% 800+ China ~28% Annual
TD Emerging Markets TPE.B 0.48% ~2.0% Varies China ~25% Annual

Best US-Listed Emerging Market ETFs (Accessible from Canada)

ETF Ticker MER Holdings AUM Top Country
Vanguard FTSE Emerging Markets VWO 0.08% 5,800+ $80B+ China ~30%
iShares Core MSCI Emerging Markets IEMG 0.09% 2,800+ $75B+ China ~28%
iShares MSCI Emerging Markets EEM 0.68% 1,200+ $18B+ China ~28%
Schwab Emerging Markets SCHE 0.11% 1,800+ $8B+ China ~30%

EM ex-China Options

ETF Ticker MER Holdings Largest Country Notes
iShares MSCI EM ex China EMXC 0.25% 600+ India ~25% Removes China entirely
Freedom 100 EM FRDM 0.49% 100 Taiwan ~25% Weights by freedom/governance metrics

Country-Specific ETFs

ETF Ticker MER Country AUM
iShares MSCI India INDA 0.64% India $8B+
iShares MSCI Brazil EWZ 0.58% Brazil $4B+
iShares MSCI South Korea EWY 0.58% South Korea $4B+
iShares MSCI Taiwan EWT 0.58% Taiwan $6B+
iShares MSCI Mexico EWW 0.58% Mexico $2B+
KraneShares CSI China Internet KWEB 0.68% China (internet) $5B+

Country Breakdown of Major EM ETFs

Country XEC Weight VEE Weight GDP Rank (EM) Key Companies
China ~28% ~30% #1 Tencent, Alibaba, CATL, BYD
India ~20% ~22% #2 Reliance, Infosys, HDFC Bank
Taiwan ~17% ~16% #3 TSMC, MediaTek, Hon Hai
South Korea ~12% ~0% (FTSE classifies as developed) #4 Samsung, SK Hynix, LG
Brazil ~5% ~6% #5 Petrobras, Vale, Itaú
Saudi Arabia ~4% ~4% #6 Saudi Aramco
South Africa ~3% ~4% #7 Naspers
Mexico ~2% ~2% #8 América Móvil, Walmex
Indonesia ~2% ~2% #9 Bank Central Asia
Thailand ~2% ~2% #10 PTT, CP All

Note: FTSE (used by Vanguard/VEE) classifies South Korea as developed; MSCI (used by iShares/XEC) classifies it as emerging.

The China Exposure Debate

If you want developed-market diversification without this concentration risk, see best international ETFs in Canada.

Viewpoint Argument Solution
Include China 18% of world GDP — can’t ignore it; diversification benefit; growth potential Standard EM ETFs (XEC, VEE)
Exclude China Regulatory risk, geopolitical tension, government intervention in markets EM ex-China (EMXC)
Reduce China Balance exposure without eliminating it entirely Smaller EM allocation (5%)
Separate allocation Control China weight independently 5% EM ex-China + 2% China-specific ETF

Emerging Market Performance

Period Emerging Markets (MSCI EM) Developed Markets (MSCI World) S&P 500
2020–2024 (annualized) ~3% ~10% ~12%
2010–2024 (annualized) ~4% ~10% ~12%
2000–2024 (annualized) ~7% ~6% ~7%
2000–2010 (annualized) ~16% ~1% ~1%

EM outperformed massively in 2000s, underperformed in 2010s-2020s. Past performance does not guarantee future results.

Why Include Emerging Markets

Reason Detail
55% of global GDP Emerging markets produce over half of world economic output
Younger demographics Working-age populations growing (vs aging in developed markets)
Rising middle class Consumer spending growing rapidly
Diversification Low correlation with North American markets (some cycles)
Valuations EM stocks trade at significant discount to US stocks (P/E ~12 vs ~22)
Growth potential Higher GDP growth rates (5–7% vs 1–3% for developed)

Risks of Emerging Market ETFs

Risk Examples
Political instability Coups, sanctions, nationalization (Brazil, Turkey, Russia)
Currency volatility EM currencies can lose 20–40% suddenly vs USD/CAD
Regulatory risk China tech crackdown destroyed billions in shareholder value
Governance Weaker corporate governance, minority shareholder protections
Liquidity risk Some EM stocks have thin trading volumes
Capital controls Governments can restrict capital outflows
Geopolitical risk Taiwan-China tensions, US-China trade war
Higher volatility EM drawdowns regularly exceed 30–40%
Missing out on US Heavy EM allocation means less US tech/growth exposure

EM Currency Impact on Returns

Scenario Impact on CAD-Based Investor
EM currencies strengthen vs CAD Positive — boosts returns
EM currencies weaken vs CAD Negative — drags returns even if local stocks rise
USD strengthens vs EM currencies Negative for EM stocks (capital outflows)
USD weakens vs EM currencies Positive for EM stocks (capital inflows)

Currency impact can add or subtract 5–15% to annual returns.

Portfolio Allocation

This decision is easiest when you first set your broad stock/bond mix using asset allocation by age.

Approach EM Weight Implementation
Market-weight global ~10% Already in XEQT/VEQT (~5-8%)
Moderate overweight 10–15% Add XEC or VEE alongside core
Equal-weight by region 20–25% Deliberate EM tilt
Underweight/avoid 0–5% Via all-in-one only, no additional EM

If you want those exposures bundled for simplicity, compare best all-in-one ETFs in Canada.

Sample Global Portfolio with EM Tilt

Holding Allocation Region
VFV (S&P 500) 35% US
XIC (Canada) 25% Canada
XEF (EAFE) 20% Europe/Japan/Australia
XEC (Emerging Markets) 15% EM
ZAG (Bonds) 5% Canada

TSX-Listed vs US-Listed EM ETFs

Factor TSX-Listed (XEC, VEE) US-Listed (VWO, IEMG)
MER 0.24–0.29% 0.08–0.11%
Currency Trades in CAD Trades in USD — need FX conversion
US withholding tax (RRSP) 15% drag on US-layer dividends 0% (Canadian treaty with US)
US withholding tax (TFSA) 15% drag 15% drag
Complexity Low — buy on TSX Moderate — need USD
Best for TFSA ✅ Simpler Slightly better tax on direct EM dividends
Best for RRSP Good Better MER, no US withholding

If you plan to buy the US-listed versions, use Norbert’s Gambit and review best account type for US stocks and ETFs in Canada.