I recently realised that, for example, Blackrock's emerging market ETF includes Chinese and South Korean stocks. South Korea has a higher GDP per capita than Spain, and the Chinese shares in the ETF are some of the largest companies in the world. I personally wouldn't consider these economies to be "emerging", so what are the criteria, or who decides which countries to include?

If these economies continue to develop the way they have in recent decades, are there any established procedures for countries or companies to become excluded from an emerging market ETF? Perhaps in the way that companies move in and out of small-cap/mid-cap/large-cap indices?

  • 1
    it's freaky that "China" is considered an "emerging" market. They should list the US as a "colony".
    – Fattie
    Jan 26, 2018 at 1:05
  • 2
    I think the Chinese government specifically tries to stop itself from being declassified as an emerging economy. It entails loosing benefits, in terms of trading with developed economies, as assigned to an emerging economy. Not sure about South Korea being an emerging economy.
    – DumbCoder
    Jan 26, 2018 at 10:17
  • I mean that's true, DC. But political nonsense means nothing. Blackrock, in a product, classify those two as "emerging". It's beyond ridiculous. Every single product I own is made in S. Korea. I mean you might as well still label Japan as "recovering from WW2" or something.
    – Fattie
    Jan 26, 2018 at 18:45

2 Answers 2


Blackrock's Emerging Market ETF is based off of MSCI's Emerging Market Index. So the ETF will include the countries in the index and the established procedure is that when a country is no longer included in the index it will (with some rare exceptions) not be included in the ETF. I realize this answer is not particularly helpful so lets take this a step further.

If you read the Second Appendix of MSCI's Global Mark Index Methodolgy is explains the framework under which they classify countries. The classification is "generally based on qualitative measures" and is clearly pretty subjective. Korea is not mentioned specifically here but there is significant disagreement among various classification schemes on whether it should be considered emerging.

Clearly the distinction is not well defined and some of the methods could even be considered a bit racist, especially historically. Wikipedia has a rather good discussion of the terms and their history.

  • excellent links. If I'd found the wikipedia article, I probably wouldn't have needed to post the question.
    – craq
    Jan 26, 2018 at 5:40
  • "some of the methods could even be considered a bit racist" — Could you give an example?
    – Flux
    Sep 23, 2022 at 19:09

One company that has a publicly stated methodology regarding market classifications is MSCI. They have a document called the MSCI Market Classification Framework that has various criteria for determining whether a country is Frontier, Emerging or Developed.

These criteria include income per capita, total market cap of listed securities, free float market cap of listed securities, liquidity, market accessibility/foreign ownership.

They review this yearly and reclassify countries as required, often with external consultation.

Some relevant links on the MSCI site include: https://www.msci.com/documents/1296102/1330218/MSCI_Market_Classification_Framework.pdf




With regards to the Blackrock Emerging Market ETF, this is designed to track the upon the MSCI Emerging Markets Index, which is described here:



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