 Good day fellow investors. Now I have made in my previous video a very strong case about why you should invest in emerging markets. Now the common environment would tell you okay find an emerging market ETF and invest and that's it. Enjoy your life. I could accept an SAP 500 ETF all right but emerging markets and ETFs are not the way to go. I'll explain why. First emerging markets are very very differentiated. The SAP 500 is one country one economic you know what you get. Emerging markets there are 20 countries in emerging markets Russia, China, Brazil, Egypt, Turkey so each country is different. Each country is a different economic short-term cycle in a different economic long-term cycle different growth different everything is different and what an emerging market does it weights those influences based on market capitalization. So when there is euphoria about China the ETF buys more stocks in China because the market capitalization is higher. When there's panic in Brazil the market capitalization is lower and ETFs sell stocks in Brazil to buy in China. A clear example of buying high and selling low you don't want to be invested in such a vehicle because what you want to do in emerging markets is look at the long-term trend and then invest when it's something is cheap like Brazil was last year and sell when something is expensive or if you buy an ETF you buy a little bit of everything and mostly the expensive stocks. If you look for yourself you can find cheap stocks that have all the qualities and the benefits of what an ETF offers you and you can find five stocks around the world I'll be making a few videos about emerging market stock picks and it's much better much lower valuations higher dividend yields higher stability than an ETF and you can buy them cheap and then sell them high in the future. The opposite of what an ETF does emerging markets are very very different and if we look at the emerging market ETF exposure 25% is in China 14% is in South Korea which I wouldn't call an emerging market but okay and Samsung is the biggest company and Samsung is a global company so you might as well buy Apple then Taiwan chips again information technology and only then 8% of the ETF is India 8% is India the company that now has 1.3 billion inhabitants is growing at above 6% economics and will have 1.7 billion by 220 so you are exposed 15% to South Korea which is a small country very technological car makers mobile phone makers very cyclical and just 8% to India which is expected to be the new China again not a reason to invest in emerging markets and then if you go to smaller countries you'd see that the exposure is practically minimal let's look now at top holdings the top holding of the ETF is Samsung with a weight of 4% Samsung electronics you might as well buy Apple is the same thing Tencent okay owning Ale Baba China Taiwan semiconductor manufacturing again information technology information technology information technology so why is an ETF so overweight information technology because they have to buy the stocks that are priced high with high market capitalizations the hot stocks they have to sell the stocks that nobody wants to look at because they are too cheap and they call it risky buy high sell low is what ETFs do especially in emerging market just look at sector allocation for the emerging market if ETF of the top 20 holdings seven are in information technology and eight are financials emerging market financials you have to know what you're doing those are big government run banks high market capitalizations with small floats but the ETFs has to buy the company the biggest company government involvement a lot of bureaucracy questionable profit making politics so okay there are good investments but you don't want to be so exposed to such investments I prefer smaller companies growth companies stable companies with a margin of safety banks okay will be good but this is not an ETF that's spread well it's an IT banks ETF and another reason why ETFs are dangerous is liquidity so an ETF is a big institution that buys or an index funds buys index according to market capitalization market capitalization higher they buy more when the shift turns they are forced to sell and emerging markets are illiquid when you compare them to developed markets if they're illiquid when an ETF has to sell it can really send the stock price extremely low like it has been the case for Brazil for example a year ago stocks were extremely cheap thankfully I took advantage of that now what can you do let me show you a few differences that from an ETF and individual stocks I checked the list and from the top 100 ETF holdings I found a few interesting stocks for example the Chinese banks bank of China has a price earnings ratio of 5.5 with a dividend yield of 5.74 much better than Korean IT company Hyundai Motor Company is a motor company price earnings ratio of 6.94 dividend yield of 4.13 17% share of the Indian car market so you want to be exposed to that on the oil side you can own ExxonMobile at the price earnings ratio of 42 or Gasprom at the price earnings ratio of 4 and a dividend yield of 5.74 with a dividend payout ratio of just 22% compared to Exxon's 158% on the utilities side Korea Electric Power Corporation has a price earnings ratio of 4 dividend yield of 7 Chinese utility price earnings ratio of 7 dividend yield of 10% Latin America, SEMIC or how do you pronounce it price earnings ratio of 12.10 dividend yield of 3.6 so just by looking a bit at individual companies we can find great companies very cheap high dividend yields high expected growth exposed to great markets like India that will make a huge difference with your portfolio an ETF will just buy what's currently hot and expensive and sell what's cheap it's your choice it's your money take responsibility for your financial future thank you for watching leave your comments below I love talking to you interesting stock picks share it share them with us let's create a community please subscribe for more content and I'll see you in the next video