Navigating Emerging Markets Equity Income: The Rise of Multifactor ETFs and Their Distribution Consistency

Emerging markets have long been a double-edged sword for investors: offering high-growth potential but plagued by volatility, geopolitical risks, and currency fluctuations. In recent years, multifactor ETFs have emerged as a compelling solution to navigate these challenges, blending strategies like value, momentum, and quality to enhance risk-adjusted returns. This article examines the performance and distribution consistency of multifactor ETFs in emerging markets, drawing on 2023–2025 data to assess their viability for equity income strategies.

Performance Trends: From 2023 to 2025

The early 2023 period saw a divergence in emerging markets ETF performance. While broader optimism about China's recovery and a weaker U.S. dollar failed to materialize, factor-based strategies outperformed. The SPDR S&P Emerging Markets Dividend ETF (EDIV), for instance, surged 34.74% year-to-date, underscoring the appeal of dividend-paying stocks in uncertain environments10 Best Emerging Markets ETFs of 2023 by …^[3]. Similarly, the iShares MSCI Emerging Markets Small-Cap ETF (EEMS) returned 18.24%, capitalizing on undervalued smaller companies10 Best Emerging Markets ETFs of 2023 by …^[3].

By 2024 and 2025, the narrative shifted. A resilient U.S. dollar and slower Chinese growth created headwinds, yet multifactor ETFs like the Hartford Multifactor Emerging Markets ETF (ROAM) and WisdomTree Emerging Markets Multifactor Fund (EMMF) maintained traction. EMMF, which combines value, quality, momentum, and low correlation factors, delivered a 16.42% YTD return in 2024EMMF - WisdomTree Emerging Markets Multifactor Fund^[1], while ROAM's balanced approach mitigated risks while capturing growthBest Emerging Market ETFs for Long-Term Growth …^[4]. These results highlight the adaptability of multifactor strategies in volatile markets.

Distribution Consistency: A Critical Lens

For equity income strategies, consistent distributions are paramount. The iShares Emerging Markets Equity Factor ETF (EMGF) exemplifies this, with a 3.16% dividend yield in 2025EMGF Dividend History - iShares Emerging Markets Equity Factor^[2]. EMGF's semi-annual payout structure—$0.386 in June 2024, $1.160 in December 2024, and $1.79 in June 2025—demonstrates a growing trend in dividend reliability10 Best Emerging Markets ETFs of 2023 by …^[3]. This consistency is partly attributed to its focus on large- and mid-cap companies, which tend to have more stable cash flows compared to smaller firms.

In contrast, the WisdomTree Emerging Markets Multifactor Fund (EMMF) and John Hancock Multifactor Emerging Markets ETF (JHEM) lack explicit distribution data in recent reportsEMMF - WisdomTree Emerging Markets Multifactor Fund^[1]. However, their low expense ratios (0.48% and 0.49%, respectively) and diversified portfolios suggest a focus on long-term capital appreciation over regular incomeEMMF - WisdomTree Emerging Markets Multifactor Fund^[1]. This distinction is critical for investors prioritizing income versus growth.

Comparative Analysis: EMMF vs. JHEM

While both EMMF and JHEM target emerging markets through multifactor strategies, their profiles diverge. EMMF, with a $25 million asset base and a Bronze Medalist Rating from Morningstar10 Best Emerging Markets ETFs of 2023 by …^[3], emphasizes a rules-based approach to factor selection. JHEM, managing $668 million, offers broader diversification (score: 6.5/10) but carries a higher FI Score (65 vs. 49 for EMMF), indicating stronger retirement investment potentialEMMF - WisdomTree Emerging Markets Multifactor Fund^[1]. These nuances underscore the importance of aligning fund characteristics with investor objectives.

Future Outlook and Strategic Considerations

Looking ahead, emerging markets face a mix of opportunities and challenges. Geopolitical tensions and interest rate uncertainty could amplify volatility, but technological adoption in markets like India and South Africa presents growth avenuesEMGF Dividend History - iShares Emerging Markets Equity Factor^[2]. For equity income strategies, ETFs like EMGF, with predictable dividend patterns, may offer stability, while multifactor funds like EMMF and ROAM could balance risk and return. Investors should prioritize funds with transparent factor methodologies and robust liquidity, especially in high-volatility environments.

In conclusion, multifactor ETFs are reshaping equity income strategies in emerging markets by combining diversification with factor-driven returns. While distribution consistency varies, the sector's adaptability and innovation make it a compelling option for investors seeking to harness emerging markets' potential without overexposure to their risks.