At The Money: Investing in Freedom

Key Takeaways

• FRDM returned 67% in 2025, beating S&P 500
• Index weights countries by civil, political, economic freedoms
• Over $2 billion AUM, managed by Life & Liberty Indexes
• Autocratic exposure reduced; China, Russia excluded
• Investors view it as pure “freedom premium” strategy

Summary

The Freedom 100 Emerging Markets ETF (FRDM) uses a freedom‑weighted index to allocate capital to the world’s freest emerging‑market economies, deliberately excluding autocratic nations such as China, Russia, Saudi Arabia, Egypt and Turkey. Managed by Life and Liberty Indexes, the fund now holds over $2 billion in assets and posted a 67% return in 2025, outpacing the S&P 500’s 17.9% gain and the MSCI Emerging Markets Index’s 33% rise. Its methodology blends civil, political and economic freedom scores from the Cato and Fraser Institutes to construct country weights. The product is marketed primarily as a “freedom premium” strategy that seeks higher returns while mitigating geopolitical risk.

Pulse Analysis

Investors are increasingly looking beyond pure market‑cap metrics to capture what industry insiders call the "freedom premium." The Freedom 100 EM Index ETF (FRDM) exemplifies this shift, delivering a 67% gain in 2025—more than double the MSCI Emerging Markets Index and nearly four times the S&P 500’s performance. By focusing on countries that score highly on civil, political, and economic liberties, the fund sidesteps the volatility associated with authoritarian regimes, which have historically suffered sharp drawdowns during geopolitical shocks.

The ETF’s methodology relies on third‑party freedom scores from the Cato Institute and the Fraser Institute, aggregating 87 variables that span everything from property rights and rule of law to freedom of the press and personal safety. This contrasts sharply with traditional emerging‑market indices that weight by market capitalization, often inflating exposure to autocratic giants like China. By rebalancing toward nations where investors can count on transparent data, independent judiciaries, and stable monetary policies, FRDM reduces hidden political risk while tapping into growth stories that thrive under open‑society conditions.

For portfolio managers, the Freedom 100 EM Index offers a dual advantage: a clear risk‑mitigation framework and a proven return driver. As global investors grapple with supply‑chain disruptions, regulatory crackdowns, and the lingering fallout from the pandemic, funds that embed freedom metrics are poised to attract capital seeking both ethical alignment and performance upside. While the approach may face criticism for its ideological underpinnings, the empirical outperformance and growing AUM suggest that freedom‑weighted investing is moving from niche concept to mainstream strategy.