Emerging Markets (EEM) vs Developed ex-US (EFA)
EEM closed near $52 in mid-April 2026; EFA traded near $86. The EEM/EFA ratio is approximately 0.605.
Also known as: Emerging Markets (EEM) (ETF_EEM, emerging markets, EM) · EAFE Developed (EFA) (ETF_EFA, EAFE, developed markets)
Why This Comparison Matters
EEM closed near $52 in mid-April 2026; EFA traded near $86. The EEM/EFA ratio is approximately 0.605. EEM tracks 1,200+ stocks across 25+ emerging markets (China 25%, Taiwan 22.5%, Korea 16%, India 12% top); EFA tracks 750+ stocks in 21 developed markets ex-US/Canada (Japan 22%, UK 14%, France 11%, Switzerland 10% top). The pair captures the rotation between developing and developed economies independent of US equity performance. Trailing 12 months: EEM +53 percent vs EFA +21.82 percent (31.2 percentage point EEM outperformance). Both have outperformed SPY +17.4 percent over the same period. Year-to-date 2026, EEM has led EFA by approximately 5 percentage points reflecting semiconductor and AI hardware concentration in EM.
EEM and EFA Composition Differences
EEM tracks MSCI Emerging Markets Index: 1,200+ stocks across 25+ developing economies. Country weights: China 25.08 percent, Taiwan 22.53 percent, Korea 16.15 percent, India 12.35 percent, Brazil ~6 percent, Saudi Arabia ~4 percent, Mexico ~3 percent. Top holdings: Taiwan Semiconductor 13.26 percent (single-largest), Samsung Electronics, Tencent, SK Hynix, Alibaba.
EFA tracks MSCI EAFE Index: 750+ stocks in 21 developed economies ex-US/Canada. Country weights: Japan 22 percent, UK 14 percent, France 11 percent, Switzerland 10 percent, Germany 9 percent, Australia 7 percent, Netherlands 5 percent. Top holdings: Novo Nordisk, ASML, Nestle, Toyota, LVMH, Roche, AstraZeneca.
The key composition differences: EEM is heavy semiconductor (TSMC + Samsung + SK Hynix = ~21 percent), heavy China (~25 percent), heavy emerging Asia (~80 percent including Taiwan, Korea, India). EFA is heavy Japan (~22 percent), heavy European (~50 percent including UK, France, Germany, Switzerland, Netherlands), heavy quality healthcare (~14 percent through Novo, Roche, AstraZeneca).
The 2025-2026 EEM-vs-EFA Outperformance
EEM has gained 53 percent over trailing 12 months while EFA gained 21.82 percent (31.2 percentage point EEM outperformance). The EM dominance has been driven by AI hardware semiconductor demand concentrated in TSMC, Samsung, and SK Hynix.
The TSMC alone factor: TSMC manufactures chips for Nvidia, Apple, Qualcomm, AMD AI accelerators. TSMC stock gained 80 percent in 2024-2025. With TSMC at 13.26 percent of EEM, that gain alone added approximately 11 percentage points to EEM returns. EFA has no equivalent single-stock contribution; the largest EFA holding (Novo Nordisk at ~5 percent) gained approximately 30 percent over 12 months, contributing about 1.5 percentage points.
Additional EEM drivers: Samsung Electronics +50 percent on HBM memory demand, SK Hynix +60 percent same driver. China stimulus (Tencent +30 percent, Alibaba +50 percent on regulatory clarity). India growth (Sensex new highs). Combined, EM has captured the AI hardware cycle plus China policy stimulus plus India growth.
Currency and Dollar Sensitivity
Both EEM and EFA are unhedged to USD. Currency contributions to returns differ materially.
Conditional Forward Response (Tail Events)
How EAFE Developed (EFA) has historically behaved in the 5 sessions following a top-decile or bottom-decile daily move in Emerging Markets (EEM). Computed from 1,286 aligned daily observations ending .
Following these triggers, EAFE Developed (EFA) falls 0.19% on average over the next 5 sessions, versus an unconditional baseline of +0.14%. 128 qualifying events; EAFE Developed (EFA) closed positive in 48% of them.
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Frequently Asked Questions
What's in EEM vs EFA?+
EEM tracks MSCI Emerging Markets Index: 1,200+ stocks across 25+ developing economies. China 25.08%, Taiwan 22.53%, Korea 16.15%, India 12.35%, Brazil ~6%, Saudi ~4%, Mexico ~3%. Top: TSMC 13.26%, Samsung, Tencent, SK Hynix, Alibaba. EFA tracks MSCI EAFE Index: 750+ stocks in 21 developed economies ex-US/Canada. Japan 22%, UK 14%, France 11%, Switzerland 10%, Germany 9%, Australia 7%. Top: Novo Nordisk, ASML, Nestle, Toyota, LVMH, Roche, AstraZeneca. EEM heavy semiconductor (~21% combined), heavy emerging Asia. EFA heavy Japan + Europe, heavy quality healthcare (~14%).
Why has EEM outperformed EFA in 2025-2026?+
EEM gained 53% trailing 12 months vs EFA 21.82% (31.2pp EM outperformance). Driven by AI hardware semiconductor demand concentrated in TSMC, Samsung, SK Hynix. TSMC alone factor: manufactures chips for Nvidia, Apple, Qualcomm, AMD. TSMC +80% 2024-2025. With TSMC at 13.26% of EEM, that gain alone added ~11pp to EEM returns. EFA has no equivalent single-stock contribution: largest holding Novo Nordisk ~5% gained ~30% over 12 months contributing ~1.5pp. Additional EEM drivers: Samsung +50% (HBM memory), SK Hynix +60%, Tencent +30%, Alibaba +50% on regulatory clarity, India Sensex new highs.
How does currency affect EEM vs EFA?+
Both unhedged to USD. EEM currency exposure: ~35-45% of volatility from currencies (CNY, TWD, KRW, INR, BRL, MXN, ZAR). EM currencies more volatile than developed. EFA currency exposure: ~30-40% of volatility from currencies (EUR, JPY, GBP, AUD, CHF). During 2025-2026 USD weakness, both benefited but EEM more: ~8-10pp of EEM outperformance vs SPY currency-driven; only 4-5pp of EFA outperformance vs SPY currency-driven. The EEM-vs-EFA spread has been narrowed by currency effects (both gained from dollar weakness) but EEM still outperformed because of underlying equity gains.
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Data sourced from FRED, CoinGecko, CBOE, and other providers. This page is for informational purposes only and does not constitute financial advice. Past performance does not guarantee future results.