Active Emerging Markets ETF: Stock selection for core EM exposure

Emerging markets are an important part of the global equity conversation. The asset class offers access to long-term growth, innovation leadership and broadening domestic demand, while many EM economies are also supported by stronger fundamentals than in previous cycles.

These factors help explain why EM remains a core allocation question. But the next question is how investors should access that opportunity. Emerging markets are not one single story: they bring together countries, sectors and companies with very different growth drivers, risks and market dynamics. At the same time, the index itself has changed considerably, making the composition of EM exposure increasingly important.

The shift from resource-heavy sectors toward technology, consumer and communication services shows how much index composition has changed. For investors, this makes benchmark awareness important: the opportunity set has become more dynamic, but so have the risks of unintended country, sector or stock concentrations.

This is where a benchmark-aware active approach can be especially useful, with the opportunity lying in selecting the right stocks within the countries and sectors that make up that benchmark, because even within a single theme, outcomes can vary widely.

Take the EM tech sector, for example. AI hardware, semiconductors, platforms and digital infrastructure may all sit within the broader EM innovation story, but individual stock returns, valuations, earnings momentum and quality can diverge sharply. That dispersion creates room for active stock selection, even when country and sector positioning remains controlled.

For a core EM allocation, the key question for investors is whether their portfolio is built to use stock-level dispersion while keeping country and sector exposures under control.

Robeco’s 3D EM Equity ETF is designed as a systematic alternative to passive EM exposure: broad market access, but with a disciplined active edge.

Instead of making large country or sector calls, the strategy invests in a diversified portfolio of EM stocks using many small overweight and underweight positions versus the benchmark. This keeps the portfolio aligned with the role investors typically expect from a core EM allocation, while seeking to improve outcomes over time.

The 3D framework means the portfolio is not optimized for return alone. Return potential, benchmark-relative risk and sustainability profile are considered together, so the strategy can seek attractive stocks while managing active risk and targeting sustainability characteristics better than the benchmark. In EM, where companies can differ widely in governance standards, environmental footprints and long-term risks, that integrated approach is especially relevant.

The ETF has a long-term information ratio target of 0.6, reflecting its aim to deliver disciplined excess return while managing some of the risks that can come with broad passive exposure. Since inception, the ETF has also delivered positive gross excess returns versus the benchmark.

Although the ETF’s track record is short, the strategy builds on Robeco’s broader enhanced indexing capability, which has been developed over more than 20 years.

For investors seeking core EM exposure, Robeco's 3D EM Equity ETF combines the efficiency of the ETF wrapper with long-standing quantitative research and an integrated 3D investment process. This reflects the wider Robeco active ETF approach: systematic, research-driven and designed to evolve with investor needs.