How to invest in emerging markets from Poland — ETFs and strategies

What are emerging markets?

Emerging markets are economies developing faster than Western countries, but burdened with higher risk. The most important ones include China, India, Brazil, Taiwan, South Korea, Indonesia and Mexico.

The MSCI Emerging Markets index covers over 1,400 companies from 24 countries and is the main benchmark for this asset class.

Why have EM in your portfolio?

• Higher growth potential — faster GDP growth rate than developed countries
• Lower valuations — Price-to-Book and P/E ratios are often lower than developed markets
• Diversification — low correlation with S&P 500 over longer periods
• Demographics — younger societies drive consumption

Risks of EM investing

Threats cannot be ignored:

• Political risk — regulatory changes, nationalization, sanctions
• Currency risk — EM currencies can be unstable
• Liquidity — smaller companies may have lower turnover
• Governance — corporate governance standards can be weaker

Available ETFs for emerging markets

From European exchanges (available through Polish brokers)

What to pay attention to when choosing

• TER (Total Expense Ratio) — the lower, the better for long-term investor
• Replication method — physical is more transparent, swap cheaper
• Accumulation vs distribution — accumulating (Acc) are more tax-efficient in Poland
• Base currency — EUR or USD, but you buy for PLN (broker converts currency)

How much EM in portfolio?

Typical allocations:

• Conservative portfolio: 5–10% in EM
• Balanced portfolio: 10–20% in EM
• Aggressive portfolio: 20–30% in EM

Many investors use a simplified rule: EM proportion in global MSCI ACWI index is around 11–12%, so that's "neutral".

How to buy EM ETF through Polish broker?

1. Open account with broker having access to European exchanges (XTB, mBank eMakler, Degiro, Interactive Brokers)
2. Search for ETF by ticker, e.g. EIMI on Xetra
3. Submit buy order — mind the currency (usually EUR)
4. Invest regularly — monthly DCA smooths volatility
5. Consider IKE/IKZE — some brokers offer EM ETFs within retirement accounts

Strategy for years

Emerging markets are volatile — one year +40%, next year −20%. Therefore:

• Invest long-term (minimum 10 years)
• Use DCA instead of trying to catch bottoms
• Rebalance portfolio once a year
• Don't react emotionally to local crises

How Freenance can help

Freenance allows tracking geographical exposure of your portfolio in one view. You'll see:

• What percentage of portfolio emerging markets constitute
• How your allocation behaves over time
• When it's worth rebalancing

👉 Check your EM exposure with Freenance — freenance.io