ETFriday: Emerging Markets Hold 6% Yields While Sweden Reprices at 5% Drawdowns

This Week's Setup

Emerging markets own the top two Pixie Ranks at earnings yields near 5–6 percent while drawdowns sit just above 10 percent, the third consecutive week this cohort has dominated the screen.

Fear & Greed touched 40, holding in fear territory for the second week as the S&P 500 CAPE remains at 38.9, a long-cycle valuation level that has historically preceded single-digit forward returns.

Energy and utilities resurface in ranks 4 and 5 with yields near 4.7 percent and drawdowns under 8 percent, while Sweden returns at a 6.2 percent earnings yield and a 4.8 percent pullback.

Quick Scan

The 8 Names

1. Freedom 100 Emerging Markets ETF (FRDM)

3y annualized return: n/a | Life annualized return: 16.36% | 52w drawdown: -14.17%

The 4.79 percent earnings yield places this fund 130 basis points above the 10-year Treasury, the widest spread among the top five names, while the 16.4 percent annualized life return is the strongest performance metric in the entire cohort.

The 14.2 percent drawdown is the deepest pullback in the top five, a function of the fund's tilt toward politically sensitive markets that have repriced during the past six months.

Barron's reported the end of zero-fee ETF trading this week, a shift that could compress inflows to smaller emerging-market funds as investors consolidate around the lowest-cost platforms.

2. Avantis Emerging Markets Equity ETF (AVEM)

3y annualized return: n/a | Life annualized return: 11.63% | 52w drawdown: -10.47%

The 6.08 percent earnings yield is the highest in the screen, a 142-basis-point premium to the 10-year Treasury, while the 10.5 percent drawdown is the shallowest among the top three emerging-market names.

Avantis crossed $150 billion in assets under management in under seven years, according to PR Newswire, a growth rate that signals institutional adoption and positions the firm as a structural competitor to iShares and Vanguard in factor-based emerging-market exposure.

Zacks highlighted Taiwan exposure ahead of NVIDIA's $150 billion AI capital commitment, a tailwind for semiconductor-heavy emerging-market funds that overweight technology supply chains.

3. iShares Core MSCI Emerging Markets ETF (IEMG)

3y annualized return: n/a | Life annualized return: 6.02% | 52w drawdown: -10.65%

The 5.24 percent earnings yield sits 58 basis points above the 10-year Treasury, while the 1.51 percent dividend yield is the highest among the top three emerging-market funds.

24/7 Wall St. noted that this fund charges 87 percent less than EEM while tracking nearly identical holdings, a fee arbitrage that has driven $100 billion in cumulative inflows since launch and makes IEMG the de facto low-cost benchmark for emerging-market allocations.

The 6.0 percent annualized life return trails both FRDM and AVEM by 5–10 percentage points, a spread that reflects the fund's market-cap weighting and lack of factor tilts toward value or profitability.

4. State Street Energy Select Sector SPDR ETF (XLE)

3y annualized return: n/a | Life annualized return: 6.43% | 52w drawdown: -7.60%

The 4.78 percent earnings yield is 12 basis points above the 10-year Treasury, while the 7.6 percent drawdown is the smallest pullback among the top five names, a function of stabilizing oil prices and steady refining margins.

The 3.68 percent dividend yield is the second-highest in the screen, offering income while the sector consolidates near the low end of its 12-month range.

The sector's 1.6 percent one-year price trend is the weakest momentum signal in the top five, a reflection of demand concerns tied to China's industrial slowdown and the uncertain pace of global growth deceleration.

5. State Street Utilities Select Sector SPDR ETF (XLU)

3y annualized return: n/a | Life annualized return: 10.41% | 52w drawdown: -6.38%

The 4.72 percent earnings yield is 6 basis points above the 10-year Treasury, while the 4.36 percent dividend yield is the highest in the screen, a combination that has historically outperformed during late-cycle periods when growth decelerates and income demand rises.

24/7 Wall St. reported that this fund raised its monthly payout again, a pattern that reflects stable regulated cash flows and positions utilities as a defensive alternative to equity-risk assets at current valuations.

The 0.4 percent one-year price trend is the weakest momentum signal in the top eight, a function of rate-duration sensitivity that has kept the sector range-bound despite the payout growth.