FEM ETF: What Is It? A Complete Guide to Returns, Expense Ratio, Holdings and Alternative ETFs
A smart beta emerging markets ETF built on the AlphaDEX methodology, it uses quant-based stock selection to seek excess returns over the broader market.
SubscribeWhat Is This ETF?
The fund tracks the NASDAQ AlphaDEX Emerging Markets Index and looks for emerging market stocks with strong financial health and high growth potential. Rather than simply favoring the largest companies, its strategy focuses on businesses with solid underlying fundamentals.
It suits investors who want exposure to emerging markets, hope to outperform the benchmark index, and prefer a systematic quant strategy.
It is a passively managed (index-tracking) ETF launched by First Trust in 2011.
How Does It Invest?
| Item | Details |
|---|---|
| Tracked Index | NASDAQ AlphaDEX Emerging Markets Index |
| Management Style | Passive (smart beta) |
| Rebalancing Frequency | Semiannual |
| Dividend Frequency | Quarterly |
| Expense Ratio | 0.80% |
The AlphaDEX methodology evaluates growth factors and value factors together to select top-ranked stocks. The selected stocks are grouped by rank and assigned weights, producing a portfolio that differs from conventional market indexes.
- A rigorous stock selection process based on financial metrics
- A proprietary weighting approach that reduces the concentration in large market capitalizations
Size and Costs
Assets under management (AUM) stand at $747.9M, and the expense ratio is 0.80% per year.
Unlike typical emerging market index ETFs, which are built mainly around large-cap companies, this fund reorders its holdings based on financial metrics, so it can show a distinctive performance path depending on market conditions.
Performance and Trends
1-Year Price Performance
Dividend & Yield
52-Week Price RangeAmid the reshaping of global supply chains and the upgrading of industry in emerging economies, the fund's weights in the technology and industrial sectors are adjusted flexibly as it works to maintain a steady performance.
Fund flows are driven by capital inflows into emerging markets and by the economic recovery outlook of individual countries. Inflows become especially noticeable when interest in smart beta strategies rises.
Strengths and Weaknesses
Systematic quant-based stock selection offers the potential for excess returns, but the expense ratio is somewhat higher than that of general index ETFs.
💪 Key Strengths
⚠️ Points to Watch
Alternative ETFs and Related Products
FNDE and PXH, shown in the table, are ETFs with similar strategies that focus on fundamental metrics, while XSOE is a product that improves efficiency by excluding state-owned enterprises. If you want broad emerging market exposure instead, VWO, IEMG and EEM are worth considering together. These funds use market-cap weighting and faithfully reflect the movement of the emerging market as a whole.
Peer Comparison ETFs| Ticker | Name | Price | Change | AUM | Total Expense Ratio | Dividend Yield | 1Y |
|---|---|---|---|---|---|---|---|
 FNDE | Schwab Fundamental Emerging Markets Equity ETF | $40.83 | +1.4% | $9.9B | 0.39% | 3.64% | +11.7% |
 FRDM | Freedom 100 Emerging Markets ETF | $62.16 | +0.6% | $3.2B | 0.49% | 1.9% | +30.9% |
 PXH | Invesco RAFI Emerging Markets ETF | $28.25 | +1.7% | $1.9B | 0.47% | 4.11% | +10.1% |
 EMGF | iShares Emerging Markets Equity Factor ETF | $66.25 | +1.2% | $1.9B | 0.26% | 2.18% | +14.2% |
 XSOE | WisdomTree Emerging Markets ex-State-Owned Enterprises Fund | $43.01 | +0.7% | $1.9B | 0.32% | 1.81% | +10.9% |
Top Holdings| Ticker | Name | Weight | Price | Change | Market Cap | P/E | Dividend Yield |
|---|---|---|---|---|---|---|---|
 PRTH | Priority Technology Holdings Inc | 0.02% | $7.92 | +0.1% | $653.2M | 11.6 | - |
| PBR-A | Petroleo Brasileiro SA Petrobras ADR | 0.02% | $17.32 | -5.9% | $47.2B | 4.4 | 8.57% |
| ASX | ASE Technology Holding CoLtd ADR | 0.01% | $37.51 | -3.9% | $82.8B | 35.3 | 1.73% |
 KOF | Coca-Cola Femsa SAB de CV ADR | 0.01% | $116.40 | -0.0% | $6.1B | 18.4 | 3.58% |
 CX | Cemex SAB de CV ADR | 0.01% | $10.93 | +3.2% | $16.5B | 25.6 | 1.29% |
 UGP | Ultrapar Participacoes SA ADR | 0.01% | $5.60 | -0.7% | $6.0B | 9.3 | 6.94% |
 GGB | Gerdau SA ADR | 0.01% | $4.60 | -1.3% | $5.7B | 16.8 | 3.64% |
| VALE | Vale SA ADR | 0.01% | $11.43 | +4.1% | $46.5B | 81.6 | 8.58% |
| GFI | Gold Fields Ltd ADR | 0.01% | $36.75 | +6.3% | $32.6B | 7.5 | 5.69% |
 TKC | Turkcell Iletisim Hizmetleri A.S ADR | 0.01% | $4.73 | +1.3% | $4.1B | 9.1 | 4.32% |
Investor Checkpoints
The FEM ETF is a tool for savvy investors who want more than simple index tracking. However, you need to weigh the characteristics of emerging markets and the fund's operating costs at the same time.
| Checkpoint | What to Check | Current Status |
|---|---|---|
| 📊 Reliability of the Quant Model | Understand the past performance and logic of the AlphaDEX methodology | Needs verification |
| 🌏 Country Exposure | Review the economic conditions of major investment countries such as Taiwan and China | Fluid |
| 💰 Expense Ratio | Whether the costs incurred are reasonable relative to the excess return target | Somewhat high |
| 💱 Currency Volatility | Check the risk from changes in the value of the currencies of the countries invested in | Exposed |
Emerging market stocks have lower liquidity than developed markets and are more vulnerable to external factors. In particular, keep in mind that emerging market asset values can fall during periods of a strong US dollar.
This ETF pursues alpha in emerging markets through sophisticated, data-driven stock selection, making it a suitable product to use as one pillar of asset allocation from a long-term perspective.
SubscribeDisclaimer: This content is for informational purposes only and does not constitute investment advice. All investment responsibility lies with the investor.
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