The Freedom 100 Emerging Markets ETF (FRDM) seeks to track an index that measures the investment performance of the 100 largest and most liquid emerging market companies across developing economies including China, India, Taiwan, and Brazil. This equity ETF provides exposure to rapidly growing economies outside developed markets.
How It Works
FRDM uses a passively managed, market-capitalization-weighted approach that selects the top 100 emerging market stocks by size and liquidity metrics. The fund rebalances quarterly to maintain index alignment and ensure holdings remain among the largest, most tradeable emerging market companies. With concentrated exposure to 100 positions, the ETF focuses on established emerging market leaders rather than smaller, less liquid stocks typical of broader emerging market indices.
Key Features
- Concentrated approach with only 100 holdings versus 1,000+ in typical broad emerging markets ETFs, reducing small-cap volatility
- Zero expense ratio structure makes it one of the lowest-cost emerging markets ETFs available to investors
- 2.20% dividend yield provides income generation from emerging market dividend-paying companies alongside growth potential
Risks
- This ETF can lose value during emerging market selloffs, potentially declining 40-60% during global risk-off periods like 2008 or 2020
- Currency fluctuations can significantly impact returns as underlying holdings trade in local currencies that may weaken against the dollar
- Political instability, regulatory changes, or economic crises in major emerging markets like China or India could cause substantial losses
Who Should Own This
Best suited as a satellite holding (5-15% of equity allocation) for growth-oriented investors with 7+ year time horizons seeking emerging markets exposure. High risk tolerance required due to significant volatility and geopolitical risks. Appropriate for investors wanting concentrated exposure to established emerging market leaders rather than broad market diversification.