Recently, emerging markets have clearly stood out, consistently ranking near the top of the ACGS leaderboard—an uncommon and noteworthy development.

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The Asset Class Group Score (ACGS) page is designed to organize ETFs into defined asset class groups in order to identify where leadership sits across global markets. One of the primary objectives of this framework is to highlight which areas of the market are demonstrating sustained relative strength. Recently, emerging markets have clearly stood out, consistently ranking near the top of the ACGS leaderboard—an uncommon and noteworthy development.

As shown in the image above, the Emerging Markets Diversified group has maintained an average score near 5.0 for several consecutive months. This marks the first time the group has reached and sustained these levels since 2011, underscoring just how rare and significant this strength truly is. At present, Emerging Markets Diversified ranks 4th out of 134 asset class groups, placing it firmly among the strongest areas of the global market.

Given this backdrop, an important question naturally arises: what do forward returns tend to look like when Emerging Markets cross above key ACGS thresholds? To answer this, the table below examines historical instances in which the Emerging Markets Diversified group moved above average ACGS levels of 4.0 and 5.0, providing insight into potential return expectations.

Instances Where the Avg ACGS Exceeded 4.0

• Short- and intermediate-term returns are notably strong, with average gains of 7.8% over three months and 8.03% over six months.
• One-year returns moderate, as momentum begins to cool, with the average one-year return coming in at 6.83%.

Instances Where the Avg ACGS Exceeded 5.0

• Returns improve across all measured timeframes, highlighting the significance of deeper leadership.
• The group posted an average three-month return of 9.0%, while the average one-year return surged to 19.23%, indicating powerful longer-term follow-through when strength reaches these historically elevated levels.

Taken together, this historical evidence suggests that a sustained move above an ACGS reading of 5.0 may act as a meaningful tailwind for Emerging Markets going forward. For those looking to get exposure, you could consider IEMG.

The iShares Core MSCI Emerging Markets ETF (IEMG) reversed up into a column of Xs in earlier this month and complete a triple top break at $74. IEMG maintains a strong fund scored of 5.30 and is up over 13% year-to-date. Additionally, the fund maintains a notable yield of 2.41%. Long exposure can be made here, given the weight of the evidence and the normalization of the 10-week trading band. Initial support is at $67, with additional strong support at $65. Initial resistance can be seen at $77.