One emerging market fund has found a new way to invest that avoids countries governed by an autocracy. In many traditional emerging market exchange-traded funds, investments are weighed by country size – the countries with the largest market capitalizations automatically take up more of the money in the fund. For investors looking to gain exposure to emerging markets, but who also want to avoid countries such as China, this can be an issue.
"This is a way for investors to get allocation to the emerging markets without funding autocracies and giving the freer countries a higher weight," Perth Tolle, the founder of Life + Liberty Indexes told CNBC's Bob Pisani at the "Future Proof" conference. To determine a freedom measure for emerging market countries, the fund uses third-party data from the Cato Institute and the Fraser Institute. The data encompasses measures of civil, political and economical freedoms.
If it tracks how those goals have been achieved under Biden in the US, it will be the worst performing fund in history.