A Quick Insight into the FREEDOM 100 Emerging Markets ETF 21Aug2025
(The views expressed here are for information purposes only and should not be construed as a
recommendation or investment advice. While the author is a CFA Charterholder
with nearly 25 years of experience in financial markets, this content
is intended to share general insights and does not constitute financial
guidance. Please consult your financial
adviser before taking any investment decision. Safe to assume the author
has a vested
interest in stocks / investments discussed if any.)
In recent years, emerging markets have become an attractive option for investors looking for high growth potential. However, with increased opportunities often comes increased risk.
For those looking to strike a balance between growth and stability, the FREEDOM 100 Emerging Markets ETF (FRDM) may be an option offering interesting possibilities and risk exposures.
This fund targets emerging economies that are not only growing but also prioritise economic freedom. In this quick snapshot, we’ll take a closer look at what makes this ETF unique, its investment strategy and how it stands out in the world of emerging market funds.
This fund targets emerging economies that are not only growing but also prioritise economic freedom. In this quick snapshot, we’ll take a closer look at what makes this ETF unique, its investment strategy and how it stands out in the world of emerging market funds.
The FREEDOM 100 Emerging Markets ETF (Ticker: FRDM) is an exchange-traded fund designed to track the performance of emerging markets with a focus on those that are considered relatively stable, investor-friendly and show a higher level of economic freedom.
The ETF aims to invest in a subset of emerging markets that are not only growing but also prioritise individual freedom and economic policies that encourage entrepreneurship, free markets and openness.
The fund seeks to track the total return performance of the Life + Liberty Freedom 100 Emerging Markets Index, a freedom-weighted emerging markets equity strategy using personal and economic freedom metrics as primary factors in its investment selection process.
Top countries
Country-wise Weights in the Freedom 100 EM ETF:
Top five countries in the ranking, as of date, are: Taiwan, Chile, South Korea, Poland and South Africa.
While India is ranked third with a weight of nearly 17 per cent in the MSCI EM Index, in the Freedom 100 EM ETF, India is ranked a poorly tenth with a negligible weight of 1.76 per cent.
This is due to the fact India ranks low in terms of economic freedom and civil liberties, compared to countries like Chile, Taiwan, South Korea, Poland and South Africa.
It is worth noting that the total market capitalisation of Indian stock market is Rs 455 lakh crore or USD 5.25 trillion, which is much larger than that of any country present in the Freedom Index.
Despite the overwhelming market cap of Indian equity markets, the country's weight in the Freedom 100 EM ETF is abysmally low.
China, Saudi Arabi and Russia do not find a place in this ETF due to obvious reasons of lack of freedom and civil liberties in these countries.
Top Ten Stocks
As on date, there are 120 stocks in the index. The top five holdings have a weight of 28.2 per cent, while the top ten contribute to 43.8 per cent -- indicating moderate concentration risk of the ETF / index, but higher compared to the MSCI EM index.
The ETF is classified as a diversified fund, meeting the requirements of US SEC.
The top 10 stocks are:
All six Indian listed stocks that find a place in the index are:
Salient Features of the ETF / Index
Companies
with 20 per cent or more state ownership (SOEs) are excluded. The
maximum weight of a single stock is capped at 8 per cent at the time of
rebalancing -- to prevent single security risk. The index is rebalanced annually.
The ETF was started on 23May2019. It's traded on CBOE BZX exchange with ticker symbol FRDM.
The ETF's assets under management (AUM) are USD 1.31 billion as on date.
The ETF was started on 23May2019. It's traded on CBOE BZX exchange with ticker symbol FRDM.
The ETF's assets under management (AUM) are USD 1.31 billion as on date.
The top five sectors of the ETF are: information technology (29%), financial services (27.6%), consumer cyclical (13.4%), industrials (7.7%) and basic materials (6.6%) as per Morningstar data as of 30Jun2025.
The index provider is Life + Liberty Indexes. Perth Tolle is the founder of Life + Liberty Indexes and creator of the Freedom 100 EM Index and ETF (FRDM).
The fund’s investment advisor is Empowered Funds LLC, doing business as ETF Architect.
Expense Ratio is 0.49 per cent. The ETF has an annual turnover ratio of 20 per cent, which is much lower versus its comparables.
The fund normally distributes its dividend income quarterly. Its dividend yield is 2.50 per cent.
Returns: On a one-year, three-year and five-year basis, the Freedom 100 Emerging Markets ETF has outperformed Diversified Emerging Markets average return, as per data from aaii.com.
Its standard deviation is 18.2 per cent, higher than the benchmark EM index.
Summary
In conclusion, the FREEDOM 100 Emerging Markets ETF (FRDM) stands out as a unique option for investors seeking exposure to emerging markets with a focus on stability and economic freedom.
With solid returns and a diversified portfolio of stocks from some of the world's most promising and business-friendly countries, FRDM offers a balanced approach to get exposure to the potential of emerging economies.
As with any emerging market investment, FRDM is not without its risks. While the ETF focuses on countries with higher levels of economic freedom, it’s important to remember that emerging markets by nature are often more volatile than developed markets.
These risks include political instability, currency fluctuations, and economic uncertainty in some of the underlying countries. Additionally, even though the ETF avoids the most high-risk nations, it still includes markets that may experience significant growth but can also face challenges like over-regulation or external economic shocks.
As always, it’s crucial to conduct thorough research and consider your investment goals before adding an emerging market ETF to your portfolio.
These risks include political instability, currency fluctuations, and economic uncertainty in some of the underlying countries. Additionally, even though the ETF avoids the most high-risk nations, it still includes markets that may experience significant growth but can also face challenges like over-regulation or external economic shocks.
As always, it’s crucial to conduct thorough research and consider your investment goals before adding an emerging market ETF to your portfolio.
This isn’t investment advice. Even though the author is a CFA Charterholder with nearly 25 years of experience in the financial markets, this is just general insight—not a recommendation.
- - -
-------------------
References and additional data:
The FREEDOM 100 Emerging Markets ETF
FRDM quote Google Finance
CBOE BZX exchange volume / price data
AAII ETF Evaluator - good overview
Morningstar page for FRDM
Forex data bank - MSCI EM index (Update 06Jul2025 with chart 111)
Tweet 18Feb2022 on the ETF
Screenshot 1 showing method of selecting the universe of stocks >
Screenshot 2 showing ETF details, like top countries and stocks (data 30Jun2025) >
Screenshot 3 from FRDM presentation showing details of EM addition and deletions from MSCI EM index >
Screenshot 4 from FRDM presentation showing divergence of freedom levels among EMs - India is at the lower rung of the Freedom index (the Human Freedom Index 2024), much below other EMs, like, Taiwan, Chile, South Korea, South Africa, Malaysia and Mexico.
-------------------
Read more:
Blog of Blogs Theme-wise
Weblinks and Investing
India Fixed Income Data Bank
Indian Economy Data Bank
India Forex Data Bank
Corporate Groups and Listed Companies 29Dec2024
Corporate Governance Concerns - Indian Companies 13Dec2024
Stocks and Peer Comparison by Industry 16Feb2024
Under Podger Needed Help. I Just Needed a Torch. 20Aug2025
ADR / GDR Valuation for Indian Companies - Demystified! 18Aug2025
Notes from Damodaran's Corporate Life Cycle Thesis 18Aug2025
Nifty Midcap 150 Quality 50 Index: Has Quality Lost Its Edge? 10Aug2025
How America Lives on Borrowed Money -- And Gets Away with It! 10Aug2025
Decoding the Nifty Midcap 150 Quality 50: A Midcap Strategy Built on Fundamentals 07Aug2025
Ownership Trends in NSE-listed Universe of Stocks 31Mar2025
India Loves Banks, America Loves Tech - What the Sectors Weight Say! 30Jun2025
Nifty 50 Index Evolution Over a Decade 2015 to 2025
NSE Emerging Indices Comparison 30Jun2025
Passive Titans of India: The Top 10 Equity Indices by Fund Size 17Jul2025
-------------------
Disclosure: I've got a vested interest in Indian stocks and other investments. It's safe to assume I've interest in the financial instruments / products discussed, if any.
Disclaimer: The analysis and
opinion provided here are only for information purposes and should not be construed
as investment advice. Investors should consult their own financial advisers
before making any investments. The author is a CFA Charterholder with a vested
interest in financial markets.
------------------------
CFA Charter credentials - CFA Member Profile
CFA New Badge
CFA Badge
No comments:
Post a Comment