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Emerging markets ETFs face rising concentration in AI-linked stocks

Taiwan and South Korea make up more than 45% of core emerging market index weights, while the technology sector is about 40% of benchmark allocations.

Reported · Written up by our desk · ETFs

ETF Trends says emerging markets equity ETFs have delivered strong results recently, but investors may want to revisit them as concentration risk rises around the AI theme.

The outlet points to the MSCI Emerging Markets Investable Market Index, tracked via IEMG, as having outpaced the S&P 500 this year, with double-digit gains in 2026.

ETF Trends attributes much of the momentum to the ongoing AI cycle, highlighting Taiwan and South Korea as key supply players for AI hardware and noting that chip and hardware earnings from firms such as TSMC, Samsung, and SK Hynix have helped lift the segment.

It also warns that diversification is narrowing within major benchmarks, with technology representing about 40% of index sector weights and about 25% of a portfolio tied to just three tech names, while Taiwan, South Korea, and China together account for roughly 70% of broad geographic exposure.

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