We have been advocating for Freedom Investing since 2004. Every year, The Heritage Foundation evaluates all of the world’s countries using their Index of Economic Freedom, where a high score correlates to nearly every positive measure of a country. We then use this ranking and efficient frontier analysis to craft our Foreign Stock investment strategy that we call “Freedom Investing.”
This article is part of my series where I review how Freedom Investing performs for the quarter.
About Return Data
In this analysis, I have used the actual products we are investing in rebalanced monthly to our static asset allocation targets with returns ending September 30, 2025. This analysis does not reflect our dynamic tilt or our individual stock foreign health care strategy, both of which we implement in client portfolios.
In 2024, we recategorized South Korea as a developed market (as FTSE does) rather than as an emerging market (as MSCI does). However, it is worth noting that Columbia EM Core ex-China ETF (XCEM) uses MSCI’s definition and contains some of our South Korea allocation. For the purpose of this reporting, FLKR is counted as Developed and XCEM is counted as emerging.
For comparison, I included the actual products of VEA, VWO, and ACWX. These ETFs represent a simple baseline for the relevant category. The Vanguard FTSE Developed Markets (VEA) can be compared to Developed Freedom Investing, Emerging Market (VWO) can be compared to Emerging Market Freedom Investing, and the All World ex-US (ACWX) can be compared to the Overall Freedom Investing.
I have also included some indexes. These indexes represent theoretical returns of a particular strategy. While they are unburdened by fees, I have selected the Net Return (NR) reporting for the index. The Net Return indicates that Morningstar has approximated the minimum possible dividend reinvestment, after deduction of some tax withholding. For those, MSCI EAFE Equal Country Weighted NR USD can be compared to Developed Freedom Investing, and MSCI EM Equal Country Weighted NR USD can be compared to Emerging Market Freedom Investing. Note that neither South Korea nor Canada are included in MSCI EAFE.
Lastly, I have also included the performance of the developed countries currently excluded from our Freedom Investing strategy to provide additional context. This quarter, we switched the fund used to represent Hong Kong (not currently in our strategy) to iShares MSCI Hong Kong ETF (EWH) because Franklin FTSE Hong Kong ETF (FLHK) was liquidated on July 8, 2025.
Overview
Last quarter, we saw that in 1-year returns ending June 30, 2025, Developed Freedom Investing had a -0.91% disadvantage, Emerging Market Freedom Investing had a -3.66% disadvantage, and Overall Freedom Investing had a -1.69% disadvantage.
This quarter, we saw that in 1-year returns ending September 30, 2025, Developed Freedom Investing had a -3.02% disadvantage, Emerging Market Freedom Investing had a -0.55% disadvantage, and Overall Freedom Investing had a -1.79% disadvantage.
In 1-year returns ending September 30, 2025, Emerging Markets outperformed Emerging Markets ex-China by 2.74%.
You can find our articles reviewing the performance of Freedom Investing here.
| Ticker | 3-Month | 6-Month | 9-Month | 1-Year | |
|---|---|---|---|---|---|
| MSCI EAFE Equal Country Weighted NR USD | — | 4.59% | 19.06% | 28.14% | 17.53% |
| Vanguard FTSE Developed Markets ETF (Market Return) | VEA | 5.61% | 19.40% | 27.50% | 17.19% |
| Developed Freedom Investing | 2.87% | 17.13% | 26.74% | 14.17% | |
| Austria | EWO | 5.41% | 27.00% | 52.15% | 43.64% |
| Denmark | EDEN | -4.14% | 6.41% | 3.91% | -12.70% |
| Finland | EFNL | 4.61% | 20.36% | 36.68% | 18.34% |
| Germany | FLGR | -1.69% | 14.24% | 33.87% | 25.66% |
| Ireland | EIRL | 0.58% | 16.27% | 17.04% | 1.34% |
| Netherlands | EWN | 6.44% | 25.80% | 32.13% | 16.58% |
| New Zealand | ENZL | 0.71% | 10.19% | 2.63% | -4.91% |
| Norway | ENOR | 3.28% | 13.78% | 31.42% | 22.66% |
| Singapore | EWS | 9.08% | 21.42% | 32.04% | 33.64% |
| Sweden | EWD | 3.19% | 14.69% | 29.28% | 11.18% |
| Switzerland | FLSW | 1.09% | 9.77% | 22.77% | 8.86% |
| South Korea | FLKR | 10.43% | 47.58% | 55.46% | 28.07% |
| Ticker | 3-Month | 6-Month | 9-Month | 1-Year | |
| MSCI EM Equal Country Weighted NR USD | — | 9.05% | 22.38% | 31.53% | 22.43% |
| Emerging Markets Freedom Investing | 7.97% | 22.73% | 24.53% | 16.45% | |
| Emerging Markets | VWO | 10.11% | 20.68% | 24.15% | 17.01% |
| Emerging Markets ex-China | XCEM | 6.29% | 23.01% | 22.74% | 14.27% |
| Taiwan | FLTW | 12.53% | 36.05% | 24.31% | 23.73% |
| Chile | ECH | 4.80% | 12.92% | 34.47% | 23.84% |
| Mexico | FLMX | 11.75% | 35.57% | 47.55% | 30.13% |
| Ticker | 3-Month | 6-Month | 9-Month | 1-Year | |
| Overall Freedom Investing | 4.64% | 19.10% | 26.09% | 15.08% | |
| iShares MSCI ACWI ex US ETF (Market Return) | ACWX | 6.68% | 18.90% | 26.39% | 16.87% |
| Other Developed Countries Not In Freedom Investing | Ticker | 3-Month | 6-Month | 9-Month | 1-Year |
| Australia | FLAU | 3.71% | 18.06% | 16.43% | 3.76% |
| Belgium | EWK | 5.32% | 19.21% | 28.54% | 13.98% |
| Canada | FLCA | 8.75% | 23.10% | 25.17% | 23.53% |
| France | EWQ | 2.64% | 12.87% | 25.20% | 12.03% |
| Hong Kong | EWH | 8.51% | 25.70% | 32.11% | 20.38% |
| Israel | EIS | 5.71% | 35.65% | 30.91% | 50.45% |
| Italy | EWI | 7.91% | 24.89% | 46.94% | 37.74% |
| Japan | FLJP | 7.50% | 18.52% | 21.79% | 15.67% |
| Portugal | MSCI Benchmark | 7.37% | 32.10% | 42.33% | 15.92% |
| Spain | EWP | 12.42% | 31.50% | 61.19% | 45.51% |
| United Kingdom | FLGB | 5.48% | 14.95% | 25.80% | 17.70% |
For more information about Freedom Investing, you may enjoy reading “A 25-Year Review of Freedom Investing” or “Risk-Return Analysis of Freedom Investing.”
Photo of Austria by Pierre Blaché on Unsplash. Image has been cropped. Returns data gathered from Morningstar Advisor Workstation.
