Emerging Markets ETF Jumps 32.8% Over 12 Months, Then Drops 8.4%
iShares Emerging Markets ETF advanced 32.81% over the past 12 months but plunged 8.41% in the week ending March 6, pulling its year-to-date return to 4.77%. The fund’s 25% China allocation (Tencent 3.85%, PDD Holdings 0.64%) faces pressure from a 31.9% VIX jump to 23.75 and dollar swings.
1. Performance Overview
iShares Emerging Markets ETF posted a 32.81% return over the past 12 months but declined 8.41% in the week ending March 6, pulling its year-to-date return down to 4.77%. This whipsaw reflects the fund’s sensitivity to rapid shifts in investor sentiment rather than any idiosyncratic fund issue.
2. Macro Drivers
Investor risk aversion surged as the VIX climbed to 23.75, up 31.9% over the prior month, signaling a rotation away from higher-volatility assets. Concurrent movements in the U.S. dollar and 10-year Treasury yield (from 4.58% to 4.13%) have been the primary drivers of emerging market asset performance in recent weeks.
3. China Exposure Focus
China constitutes roughly 25% of the ETF’s weight, making it the portfolio’s most consequential country bet. Top holdings include Tencent (3.85%) and PDD Holdings (0.64%), with analysts projecting 15% earnings growth for Chinese MSCI constituents in 2026; however, underwhelming stimulus or escalating geopolitical tensions could quickly reverse that outlook.