A year ago, I suggested buying shares of the VanEck Africa Index ETF (NYSE: AFK). I reasoned that this emerging markets fund “should provide an effective hedge against trade tariffs and other impediments to economic growth currently embroiling the United States and its major trade partners.”

Since then, it has accomplished that and more. On the day that article was published (Mar 20, 2025), AFK closed at $17.56. On the same date this year, it was going for $24.59 as shown in the chart below.

That works out to a gain of 40 percent in just one year. Over the same span, the State Street SPDR S&P 500 ETF Trust (NYSE: SPY) was up 15 percent. In that respect, this fund behaved exactly the way I hoped it would when I recommended it last year.

I don’t expect AFK to continue appreciating at its recent pace. After peaking above $30 on February 27, AFK fell below $25 in the weeks following the outbreak of war in Iran. Now, it’s time to move on to the next area of opportunity.

Past is not Prologue

I got in before Wall Street jumped on the Africa bandwagon. That’s why my return on this investment was so high. I could have waited until it became apparent that my thesis was correct. However, by then most of that gain would have already been realized.

When the financial markets are suddenly destabilized as they were a year ago when the Trump administration introduced its aggressive import tariff plan, momentum investing does not work. Extrapolating recent trends into the future is not a valid exercise if what comes next is quite different from what just happened.

In addition to the new import tariffs, the past year also included a military incursion in Venezuela, the threat of force to obtain Greenland’s mineral rights, and a war in Iran. One can only imagine what might happen in the year to come.

However, one need not imagine what might happen in the decades to come. Over the long haul, capital flows to opportunity. And over the next ten to twenty years, an increasing share of capitalist opportunity will be happening outside of the Unites States.

Next Stop: Emerging Markets

A few weeks ago, I added the Vanguard Emerging Markets Stocks Index Fund (NYSE: VWO) to the Personal Finance Fund Portfolio. It is designed to track the FTSE Emerging Markets All Cap China A Inclusion Index. The fund’s largest holdings by country (as of 2/28/2026) are China (29.7 percent), Taiwan (26.0 percent), and India (17.4 percent).

I like that mix. China is the economic powerhouse of Asia. Taiwan is at the leading edge of semiconductor manufacturing, which is critical to the development of artificial intelligence, robotics, and augmented/virtual reality.

Two months ago, I wrote about the virtues of investing in India, so I won’t repeat them here. Suffice to say, India’s young and rapidly growing middle-class population should drive its stock market considerably higher in the decades to come.

The macroeconomic forces that will shape the global economy over the next several decades are tilted in favor of the countries that dominate this fund’s performance. There will be the usual ups and downs along the way. But in the long run, it is difficult to imagine a scenario that does not result in a strong performance by the stocks this fund owns.

Data is Destiny

Just as I was ahead of Wall Street a year ago when I made my Africa call, I believe it won’t be long until emerging markets begin to outperform the U.S. stock market. The reasons for that have nothing to do with the war in Iran.

When the Strait of Hormuz fully reopens, that will only allow oil prices to return to where they were before the war in Iran started. It won’t do anything to address the stagnant labor market, persistent inflation, and decelerating economic growth that this country was already experiencing before the war in Iran started.

Those problems cannot be solved by slashing interest rates or lowering taxes. They are structural in nature and too embedded in our culture and economy to change quickly.

Once that becomes clear, Wall Street will start sending money overseas in droves. And when it does, emerging markets are going to be the primary beneficiaries.

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