Emerging markets ETF outperforms US stocks in 2026, driven by semiconductors and a weaker dollar.

The iShares MSCI Emerging Markets ETF (EEM) has significantly outperformed the SPDR S&P 500 ETF (SPY) in 2026, with a 20% year-to-date gain compared to SPY's 8%. This outperformance is largely due to EEM's heavy exposure to semiconductor companies like Taiwan Semiconductor and Samsung, benefiting from the global AI-driven chip demand. Additionally, a weaker US dollar has boosted returns for US investors holding emerging market assets. The recent pullback in EEM prices is seen as a normal correction amid higher market volatility, not a shift in the underlying trend. Key factors to watch going forward include the US dollar's strength, semiconductor capital expenditure cycles, and emerging market fund flows, which will determine if EEM's lead over SPY continues.