ETF Talk: Finding Funds with Facts, Fears and Future Markets

General George S. Patton, a prominent and well-known U.S. Army figure, once said, “When you have collected all the facts and fears and made your decision, turn off all your fears and go ahead!”

This quote resonates with me, and anyone who has been a Deep Woods subscriber for any amount of time will understand why. But, for any new readers, the long and short of the resonation is this: I am not one to shy away from risk, but I also am not one to take risks without having all possible facts.

With that said, I am going to present a high-risk and high-reward exchange-traded fund (ETF) opportunity. As of late, we have been in the international genre, and today is no different.

I want to introduce you to a pure play on Asiatic markets with iShares MSCI Emerging Markets Asia ETF (NYSEARCA: EEMA). EEMA narrows the emerging market universe to its most economically consequential geography: Asia. This means investors are not dealing with Latin American commodity cycles or Eastern European political whiplash — just concentrated exposure to the region that acts as the backbone of global supply chains and a primary driver of emerging market expansion.

The fund’s portfolio leans heavily into technology and export-driven economies, with meaningful exposure to semiconductors, manufacturing, financials and rising consumer markets. Taiwan’s chip dominance, India’s structural growth story and China’s sheer scale anchor the thesis. Now, when combining both the facts and the focus here, it is easy to see where both the risk and the reward come in; geographic and sector concentration amplify both upside and downside.

When global growth accelerates and risk appetite is strong, Asia’s operating leverage can translate into powerful returns. But policy shifts in China, geopolitical tensions, currency swings and tech cyclicality can produce sharp drawdowns just as quickly.

But, again, before drawing any conclusions — let’s focus on further facts, facts of a financial nature. Currently, the EEMA has net assets of $1.7 billion and assets under management of $1.82 billion, which gives investors the advantage of better trading liquidity and less risk of price-point movement. Moreover, the fund has a dividend yield of 1.34% and has paid out $1.39 per share in the past year. Given the appeal here, it is not surprising that the fund comes with a higher expense ratio of 0.49% — but risk and reward rarely come at a low price.

Courtesy of Stockcharts.com

As you can see from the chart above, EEMA can more than hold its own in the emerging market setting. The fund has been in a clear uptrend, rising from the mid-$70s to above $105 with consistent higher highs and higher lows. EEMA closed at $106.51 and is trading above both its 50-day and 200-day moving averages, with bullish alignment signaling strong momentum. A recent push to new highs suggests continued buying interest, reinforcing the constructive technical setup and underlying strength in emerging Asia markets.

The fund’s top 10 holdings include Taiwan Semiconductor Manufacturing Co. (2330.TW), 15.77%; Tencent Holdings Limited (0700.HK), 5.65%; Samsung Electronics Co., Ltd. (005930.KS), 4.46%; Alibaba Grouping Holding Limited (9988.HK), 4.07%; SK Hynix Inc. (000660.KS), 3.92%; HDFC Bank Limited (HDFCBANK.NS), 1.30%; 00939 (00939), 1.10%; Reliance Industries Limited (RELIANCE.NS), 1.05%; Hon Hai Precision Industry Co., Ltd. (2317.TW), 0.99% and MediaTek Inc. (2454.TW), 0.97%.

Ultimately, EEMA isn’t built for stability; it’s built for conviction. Investors willing to tolerate volatility in exchange for concentrated exposure to Asia’s long-term growth engine may find it compelling, however, those looking for smoother waters may prefer broader diversification. But, as General Patton said — once we have collected our facts and fears, it is time to turn off those fears and move forward. So, for risk-ready investors, EEMA may be an enticing international play on a massive emerging market.

Of course, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.