In this episode of Behind the Ticker, Brad Roth, CIO of Thor Financial Technologies, chats with Young Jae Lee, Senior Investment Manager at Pictet Asset Management about what traditional emerging market ETFs capture, what they don’t, and why the Pictet Emerging Markets Rising Economies ETF (RISE) offers true diversification.
Prefer to watch this conversation? You can do that here or on our YouTube channel.
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Emerging markets ETFs are secretly tech bets. The top five holdings in the MSCI EM benchmark mirror the top five in the S&P 500 almost sector-for-sector. Buy traditional EM ETFs and you’re really just doubling down on the same tech risk.
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Pictet’s new ETF, RISE, kicks out the biggest names in EM. It excludes Korea, Taiwan, and China entirely, even though those three countries make up more than 70% of the standard benchmark. The bet: real emerging-market exposure means growing working-age populations, not aging economies riding on legacy index weight.
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Demographics are EM’s version of AI. Borrowing from the Solow Growth Model, Young Jae Lee argues population growth is what actually drives GDP in developing markets like India, Brazil, Indonesia, and Mexico. That demographic engine deserves the same portfolio spotlight in EM allocations that AI gets in US ones.
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Dividends, not growth, have quietly powered EM returns all along. More than half of the MSCI EM benchmark’s total return over the long run has come from dividend yield, not earnings growth or multiple expansion. It’s a case for downside protection over chasing upside, and for active management that can actually navigate EM’s currency, political, and regulatory risks instead of freezing them into a passive index.
To learn more about Pictet’s ETF lineup, go here.
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