Five Multi-Country EM ETFs To Consider
Back in the day when the concept of investing in emerging markets was, well, still emerging with most investors, the practical way of getting emerging markets exposure was through an ETF or mutual fund that was a play on multiple countries.
That may be one reason why the Vanguard MSCI Emerging Markets ETF (NYSE: VWO) and the iShares MSCI Emerging Markets Index Fund (NYSE: EEM) are two of the largest ETFs by assets tracking ANY market theme, not just emerging markets.
Yes, VWO and EEM are the big kahunas on the multi-country exposure ETF block, but don't let that fool you into thinking they are the only options. Far from it. Here are five ETFs that are plays on multiple exposure that might just see their returns blossom in the second half of 2011.
1) Global X FTSE Andean 40 ETF (NYSE: AND): As we've noted here before, there are several options when it comes to gaining multi-country exposure to Latin America. The problem is that usually means heavy weights to Brazil and Mexico. AND takes a different approach as Chile (50.7%), Colombia (29.5%) and Peru (19.7%) account for all of AND's weight.
Political issues in Peru have presented some near-term headwinds, but if copper can catch a bid and foreign cash keeps flowing into Colombia, Chile and Colombia should do the heavy lifting to make Peru a moot point for AND.
2) PowerShares DWA Emerging Markets Technical Leaders Portfolio (NYSE: PIE): PIE doesn't grab a lot of press and for what reason we don't know, but have a look at the chart and you'll find an ETF that is in rally mode. The ETF currently holds 102 stocks spread across Malaysia (22.8%), South Korea (19%), Mexico (13.4%) and Indonesia (12.1%), just to name a few. PIE also does a good job of mixing in a little something from everything from large-cap value to small-cap growth and everything in between.
3) WisdomTree Emerging Markets Equity Income Fund (NYSE: DEM): The allure of DEM doesn't lie so much in country diversity (Brazil and Taiwan combine for 42% of the fund's country weight) as it does in sector diversity (four sectors get double-digit weights) and a juicy yield of 6%. With $1.75 billion in assets under management, DEM has soared 31% in the past year and a move above $62 puts the ETF in position to make a new 52-week high.
4) Market Vectors Latin America Small-Cap Index ETF (NYSE: LATM): LATM has set itself up to be an interesting short-term trade, having bounced off support at $29 to rally to the $31 area. Continued strength should carry the ETF over $33 and to a new 52-week high, though investors should note Brazil, Mexico and Chile combine for 70% of this ETF's weight and Canada, oddly enough, gets a weight of 21%.
5) SPDR S&P Emerging Asia Pacific ETF (NYSE: GMF): For those that believe Chinese equities are truly undervalued and that the country's monetary tightening cycle is nearing an end, GMF is an intriguing ETF because it is not an “all in” bet on the world's fastest-growing major economy. Rather, China accounts for 36.1% of GMF's weight and Taiwan chimes in at 28.6%. India gets a solid 17.5% and there is some exposure to Indonesia and Thailand, among others.
GMF can be purchased around $86 with a stop at $83 and a target above $90.
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