Guggenheim BRIC ETF (EEB) has attempted to combine the four popular single country markets into one handy ETF. It has become popular for those perhaps unable to buy all four individual country funds or find it more difficult to cherry-pick one or two for inclusion to their portfolios.
Brazil, Russia, India and China have been the power houses of new economic growth among developing markets. It would be difficult to consider these countries as “emerging markets” any longer since for example China is now the world’s third largest economy.
At the same time it’s impossible for these high growing economies to avoid the pitfalls of any market. These often include inflation issues. Both Brazil and India for example are battling high single digit inflation and are wrestling with ways to tame it which can negatively impact equity market appreciation. China also has had inflation issues which it has tried to contain but recently has given in to more accommodation by lowering bank reserve requirements to stimulate more economic growth. Russian markets are very much tied to volatile and currently descending commodity markets and some recent political instability. So investing in these markets hasn’t been very rewarding in 2012 as most of these markets have fallen 20-30% from recent highs in March.
Assembling (EEB) takes some ingenuity as it’s far from equally balanced in country allocation as noted below as of March 31st:
- Brazil 54.56 %
- China 18.46 %
- Hong Kong 13.61 %
- India 11.23 %
- Russia 2.15 %
This imbalance is primarily due to market capitalization issues and how deep markets might be. But potential investors should be aware of the country allocation not assuming the four constituent countries are evenly allocated.
Top fund sector exposure for EEB is below as of March 31st:
- Energy 25.28 %
- Financials 16.81 %
- Telecommunication Services 14.57 %
- Materials 14.28 %
- Information Technology 9.42 %
- Consumer Staples 8.94 %
- Consumer Discretionary 3.94 %
- Utilities 3.75 %
- Industrials 1.65 %
- Health Care 1.37 %
Below is a monthly chart of (EEB). Annotations within the chart include our general advice for most investors to just remain on the right side of the 12 period moving average (MA). Premium membersto the ETF Digest receive DeMark trend exhaustion signals as indicated within blue boxes on the chart.
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