BlackRock's iShares Core MSCI Emerging Markets ETF (IEMG) delivered a 38.00% one-year price return as of June 30, outpacing Vanguard's FTSE Emerging Markets ETF (VWO) at 20.68% over the same period — a 17.32 percentage point gap driven by South Korean stocks. MSCI includes South Korea in its emerging market index (and thus in IEMG), while FTSE Russell has classified South Korea as a developed market since 2009, excluding it from VWO. The divergence reflects the AI semiconductor rally led by Samsung Electronics and SK Hynix, which now accounts for IEMG's 23% South Korea weighting (second only to Taiwan's 27%) and has reshaped global ETF performance and US semiconductor stock flows.
BlackRock and Vanguard ETFs Post 17.32 Percentage Point Return Gap
IEMG and VWO are the world's largest emerging market ETFs, managing over $150 billion and around $120 billion in assets respectively, according to Bloomberg. At the end of August last year, VWO led with a one-year return of 4.19% versus IEMG's 3.43%. By the end of October, IEMG overtook VWO with 13.73% against 11.14%, and the gap has widened since. The performance split stems from the inclusion of Samsung Electronics and SK Hynix in IEMG. South Korea represents 23% of IEMG's portfolio, trailing only Taiwan at 27%.
MSCI and FTSE Russell Apply Different South Korea Classifications
MSCI classifies South Korea as an emerging market, placing Samsung Electronics and SK Hynix in IEMG's holdings. FTSE Russell has treated South Korea as a developed market since 2009, excluding it from VWO's emerging market index. This classification difference directly determines whether the two South Korean semiconductor giants appear in each ETF's portfolio.
SK Hynix Announces $28 Billion US Listing via ADR on Nasdaq
SK Hynix initiated a US listing process targeting $28 billion in new capital, The Wall Street Journal reported. The company will set its offering price on the 9th and begin trading American Depositary Receipts (ADRs) on Nasdaq on the 10th. Ten ADR shares will represent one SK Hynix ordinary share. SK Hynix shares weakened in the South Korean market on concerns over dilution from the new share issuance, but US semiconductor stocks rose in unison on the 6th (local time) on anticipation of the listing, WSJ stated.
FAQ
Why did BlackRock's IEMG outperform Vanguard's VWO over the one-year period ending June 30?
IEMG includes Samsung Electronics and SK Hynix because MSCI classifies South Korea as an emerging market, while VWO excludes South Korean stocks because FTSE Russell has treated South Korea as a developed market since 2009. The AI semiconductor rally led by these two companies drove the 17.32 percentage point return gap.
What is SK Hynix's planned US listing structure?
SK Hynix will set its offering price on the 9th and begin trading ADRs on Nasdaq on the 10th. Ten ADR shares will represent one ordinary share, and the company targets $28 billion in new capital through the listing.
