The ongoing crisis in the Strait of Hormuz stemming from the joint U.S.- and Israel-backed conflict with Iran has created clear winners and losers across global markets.

Energy stocks have been among the biggest beneficiaries. Oil supermajors have reported surging profits amid higher crude prices and tightening supply conditions, with critics calling for a windfall tax. Airlines, meanwhile, have struggled as fuel costs climbed, forcing some carriers to raise fares or trim routes.

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One area of the market that has held up far better than many analysts expected has been emerging markets. When the conflict first escalated, many investors believed emerging-market equities would face significant pressure because many developing economies are net importers of oil.

“The term ’emerging markets’ refers to countries that are in the middle stage of their development, only recently industrialized or just opened their markets up to foreign investment,” explains Brendan Ahern, chief investment officer at KraneShares. “The largest examples include China, India and Brazil, with some other examples being Turkey, Thailand and Indonesia.”

Countries across Southeast Asia and other regions rely heavily on imported energy to support manufacturing, transportation and industrial activity, making them vulnerable to rising crude prices. Yet despite these headwinds, emerging-market stocks have remained surprisingly resilient.

Year to date, the iShares MSCI Emerging Markets ETF (ticker: EEM) is up about 23% on a price return basis. By comparison, the State Street SPDR S&P 500 ETF Trust (SPY) has gained just over 9% over the same period. Part of this divergence comes down to valuations. After more than a decade of U.S. market outperformance, American equities remain relatively expensive.

“Over the last three months, emerging-market 2026 earnings growth estimates have been revised higher from 18% to 33%, with more firms having upside revisions than downside,” explains Matthew Bartolini, managing director and global head of research strategists at State Street Investment Management. “Despite this, emerging-market relative valuations to global equities are trading around their historical mid-point, a far better entry point than U.S. equities, which are trading around the 80th percentile.”

Starting valuations are one of the strongest predictors of long-term returns. Investors concerned about overpriced U.S. stocks and the possibility of lower future returns may therefore find emerging-market exchange-traded funds, or ETFs, an appealing source of diversification.

Here are seven of the best emerging-market ETFs to buy for 2026:

State Street SPDR Portfolio Emerging Markets ETF (SPEM)

“Emerging-market ETFs present an easy, diversified, low-transaction-cost and low-friction path to invest in emerging-market countries using a brokerage account or with the help of a financial advisor,” says Michael Ashley Schulman, partner at Cerity Partners. SPEM is a great example, charging a low 0.07% expense ratio and trading with a minimal 0.02% bid-ask spread.

This ETF passively tracks the S&P Emerging BMI Index and holds about 3,000 large-, mid- and small-cap stocks. As a market cap-weighted fund, SPEM is dominated by equities from Taiwan, China and India, at just under 75% of its portfolio collectively. Sector exposure is similar to U.S. ETFs, with a 30% technology tilt, followed by financials, at 20%. The ETF has $18 billion in assets under management.

iShares Core MSCI Emerging Markets ETF (IEMG)

“When selecting emerging-market ETFs, you should consider whether you want broad exposure to multiple developing economies around the globe, or a focus on a specific country,” Schulman says. “A growing global middle-class population within emerging-market countries could fuel economic expansion at a multiple of general global GDP growth as long as there is enough support.”

Investors looking for broad exposure may find IEMG more appealing than EEM. IEMG holds a broader portfolio of over 2,600 stocks compared to around 1,200 for EEM, and is also more affordable, with a 0.09% expense ratio versus 0.72%. Because IEMG tracks a different benchmark than SPEM does, investors can potentially use both ETFs as tax-loss harvesting partners to avoid the wash-sale rule.

Vanguard FTSE Emerging Markets ETF (VWO)

“Emerging markets can play an important role in a diversified portfolio by providing access to faster-growing economies and a broader opportunity set beyond developed markets,” says Kathy Kellert, head of index equity product at Vanguard. “Broad index-based emerging-market ETFs like VWO give investors low-cost exposure to hundreds of companies across different regions and industries.”

In classic Vanguard fashion, VWO undercuts both SPEM and IEMG, at a 0.06% expense ratio. Assuming a $10,000 investment in VWO, this implies just $6 annually in fee drag. The ETF tracks the FTSE Emerging Markets All Cap China A Inclusion Index, which spans over 6,300 companies. However, unlike IEMG, VWO does not include South Korean equities, because FTSE classifies the country as a developed market.

KraneShares CSI China Internet ETF (KWEB)

“We believe it is also important for investors to understand that not all emerging markets are created equal,” Ahern says. “In particular, China is unique within emerging markets due to its size as the second-largest economy in the world and its performance characteristics.” KWEB is KraneShares’ flagship Chinese thematic equity ETF, with over $7.1 billion in assets under management.

KWEB tracks the CSI Overseas China Internet Index, which focuses on technology, communications and consumer discretionary companies. Notable top holdings U.S. investors may recognize include Alibaba Group Holding Ltd. (BABA), Tencent Holdings Ltd. (OTC: TCEHY), Baidu Inc. (BIDU) and PDD Holdings Inc. (PDD). However, KWEB is pricier than broad emerging-market ETFs, with a 0.7% expense ratio.

VanEck Brazil Small-Cap ETF (BRF)

“Unlike headline Brazil indices, which are dominated by commodities and megacap financials, BRF offers a closer connection to the country’s domestic growth drivers,” says John Patrick Lee, product manager at VanEck. “The fund spans consumer cyclicals, real estate, utilities and basic materials, capturing Brazil’s internal economic momentum in a way that large-cap alternatives often miss.”

Investors will not find megacap commodity exporters such as Vale SA (VALE) or Petróleo Brasileiro SA (PBR) inside BRF. Instead, the portfolio is tilted toward lesser-known domestic businesses, with 70% of holdings falling into the mid-cap range of $1 billion to $5 billion and the remainder in small caps below $1 billion. Historically, BRF has been highly volatile, posting a three-year standard deviation of 27.4%.

VanEck Africa Index ETF (AFK)

“AFK captures both the continent’s vast resource wealth, including gold, copper and other minerals central to the energy transition, and its growing financial and consumer sectors,” Lee says. The ETF’s benchmark is currently the MVIS GDP Africa Index. “The fund invests in companies incorporated in Africa or deriving at least 50% of their revenues from the continent,” Lee explains.

“AFK provides broad, one-trade access to one of the world’s last major untapped investment frontiers,” Lee says. “The result is a unique entry point into a region defined by rapid urbanization, expanding financial systems and significant long-term growth potential.” However, investors interested in AFK need to be comfortable with a high 0.76% expense ratio and a volatile 19.4% three-year standard deviation.

VanEck Vietnam ETF (VNM)

“Vietnam has rapidly become a key beneficiary of global supply chain diversification, with strong foreign direct investment and a young, increasingly skilled workforce driving industrial and export growth,” Lee says. “The country’s stable macroeconomic environment, expanding middle class and rising domestic consumption further support its trajectory.” However, it remains underrepresented in emerging markets.

Investors can obtain targeted exposure to Vietnamese equities via VNM, which tracks the MarketVector Vietnam Local Index. The ETF’s portfolio currently spans 58 companies with an overweight toward financials, real estate and consumer staples. As with BRF and AFK, high fees and volatility are to be expected, with VNM charging a 0.66% expense ratio and posting a 24.6% three-year standard deviation.

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7 Best Emerging-Market ETFs to Buy for 2026 originally appeared on usnews.com

Update 05/14/26: This story was published at an earlier date and has been updated with new information.