Emerging markets (EM) equities are staging a comeback on the back of cheaper valuations and strong performance from regional tech giants.

The MSCI Emerging Markets index is up 45.4% over the past 12 months, well ahead of the S&P 500’s 25.8% return over the same period. 

The rally has so far shown no sign of stopping as EM equities almost double the return of the S&P 500 index, up 19.3% versus 8.3% year-to-date.   

As investors start to reevaluate their exposure to emerging market equities, FSA highlights 15 of the top-performing funds that are outpacing their peers and the wider market year-to-date*.

Fund	YTD return (%)	1yr return (%)	ISIN Code
HSBC MSCI Emerging Markets Islamic Screened Capped UCITS ETF	53.43	102.47	IE0009BC6K22
iShares MSCI Emerging Markets Islamic UCITS ETF	44.7	88.74	IE00B27YCP72
Carmignac Portfolio Asia Discovery	38.04	63.26	LU0336083810
GS Goldman Sachs Emerging Markets Ex-China CORE Equity Portfolio	35.21	74.35	LU2595375762
BlackRock Emerging Markets Ex-China	33.5	61.03	LU2719174737
Arga Emerging Market Equity	32.06	69.24	IE000QPXHRB1
Sands Capital Emerging Markets Ex China	31.3	51.83	IE000T4ORAA3
TT Emerging Markets Unconstrained	31.27	78.69	IE00BW9HG632
Pacific North Of South Global Emerging Markets Equity	31.03	66.45	IE0009U3Q2Q9
William Blair SICAV Emerging Markets Growth	29.87	59.09	LU1664181861
Baillie Gifford Worldwide Emerging Markets Leading Companies	29.82	57.86	IE00BK5TW610
Amundi Emerging Markets Equity Focus Ex China	29.2	57.03	LU2665725573
Wellington Emerging Markets Equity	29.02	65.73	IE00B1DS0G39
BNP Paribas Emerging Equity	28.97	49.13	LU0823413587
TT Emerging Markets Equity	28.5	78.67	IE00B4L57Z51

Some of the top-performing funds were Islamic ETFs which benefitted from a large allocation to South Korean equities.

The most commonly used EM benchmark, the MSCI Emerging Markets index, has just 18% allocated to South Korean equities compared with 45% in the MSCI EM Islamic Universal Screened Select Capped Index.

South Korean stocks have rallied significantly on the back of strong performance from its tech index heavyweights SK Hynix and Samsung Electronics.

A number of EM ex-China strategies also feature in the list, also benefitting from a similar dynamic of a larger weighting towards South Korean equities, but also Taiwan.

Taiwanese chip giant TSMC is up some 40% year-to-date and accounts for almost 20% of the MSCI Emerging Markets ex-China index.

*Only funds over $100m in size and available for distribution in either Hong Kong or Singapore were included. Performance figures according to data compiled from FE Fundinfo, in US dollars.