Five Emerging Markets ETFs That Look Attractive Now
Let’s start with a disclaimer/confession: For the bulk of 2011, emerging markets ETFs haven’t been a bowl of sugar. Due to rampant inflation and concerns about global economic growth, this asset class has been a real pain in the neck.
Acknowledging those factors, it still must be noted that many emerging markets are still going to notch GDP growth that easily tops the anemic growth rates offered by the U.S. and the Euro zone. That goes for this year, next year and probably the foreseeable future.
Yes, selective (and small position size) shopping can commence now. Emphasis on the word “selective” because not all emerging markets are created equal. Here are five ETFs that look pretty good by comparison right now.
Market Vectors Indonesia ETF (NYSE: IDX): No surprise here. Indonesia has been reliable if not excellent when compared to other emerging markets this year. On a dollar basis, the Jakarta Stock Exchange is one of only two in the world that is positive this year. Indonesia is the world’s fifth-best performer in the past 12 months, rising 20 percent, according to data compiled by Bloomberg. If you don’t like IDX, try the iShares MSCI Indonesia Investable Market Index Fund (NYSE: EIDO).
iShares MSCI Thailand Investable Market Index Fund (NYSE: THD): In the past year, Thai stocks are up 12% compared to a loss of about 2.5% for the MSCI All-Country World Index of developed and emerging nations, according to Bloomberg. The country currently trades at 2.24 times price-to-book, Credit Suisse said in a recent note. And Thailand is the other market after Indonesia that is positive in 2011.
Global X FTSE ASEAN 40 ETF (NYSE: ASEA): This ETF has been beaten up and almost unjustly we would argue. For those that just can’t decide between Indonesia and Thailand, ASEA is a great idea as those two countries combine for over 20% of the ETF’s weight.
Global X FTSE Colombia 20 ETF (NYSE: GXG): The Global X FTSE Colombia 20 ETF has been primarily dinged by two factors: Declining oil prices and weakness in Brazilian stocks. The oil situation will correct itself. Brazil we’re not so sure of in the near-term, but Colombia is a “seeing the forest through the trees” proposition. That means at some point, Colombian equities should decouple from Brazil. GXG remains as the best/least bad among LatAm country specific ETFs right now.
iShares MSCI Philippines Index Fund (NYSE: EPHE): The Philippines is part of the ASEAN group, but the country only accounts for a small portion of ASEA’s weight, so EPHE is the best and only way to get pure play Philippines exposure. Year-to-date, EPHE has sharply outperformed the four major ETFs tracking each of the BRIC countries and is only down about 2% in that time.
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