AI & “Ex-China” Rewriting the Emerging Markets ETF Playbook

The action in Emerging Markets ETFs this year has been really interesting to watch. From record-breaking asset flows to impressive results, albeit massively dispersed, this category of funds has had quite a ride so far in 2026. What comes next could be equally interesting. Asset flows shows massive capital migration into EM ETF category EM ETFs delivering impressive results but dispersion sits in double digits Structural AI earnings power is overturning the old playbook When we look at the numbers, they have been staggering. In the first half of the year, emerging markets ETFs picked up $38 billion in net new assets, outpacing what already was a spectacular 2025 asset haul totaling $35 billion in inflows for the entire calendar year, according to State Street Investment Management data. What’s more, the investor demand shows breadth — roughly 73% of emerging markets ETFs have seen inflows this year. This wide-ranging adoption of emerging markets ETFs goes well beyond the lowest-cost, broadest-portfolio exposures of funds like IEMG and VWO. It has also prompted positive narratives suggesting the flow of capital into emerging markets isn’t just a short-term tactical trade, but rather a bona fide capital migration. Why? Because as a category, international equities are capturing more net inflows than their respective asset footprint in the ETF industry. They are punching above their weight. And, perhaps more importantly, the macro engines that are driving this asset growth and strong performance have staying power. For starters, a look at the best performing emerging markets ETFs — and the ones attracting a lot of the assets — offer direct access to one of the market’s biggest investment themes: artificial intelligence. While AI has been a driving force in U.S. equity market performance and portfolio allocation decisions, invest...