Some EM ETFs Performing Worse Than Their Home Indexes
It has been a grizzly year for emerging markets and the ETFs that track them. What some investors may not know is that many of the emerging markets ETFs listed here in the U.S. are actually performing worse than the major index in the country that ETF tracks.
And not by a small margin. We looked at five emerging markets ETFs that are country specific funds, three tracking Latin America and two tracking Asia, and found four wide discrepancies between the ETFs and one of that country's major indexes.
Let's have a look.
iShares FTSE China 25 Index Fund (NYSE: FXI): The iShares FTSE China 25 Index Fund is the only member of our list that has performed roughly inline with a major index in the country the ETF tracks. That's not a good thing as the Hang Seng Index and the ETF were both down about 25% on a year-to-date basis heading into Monday. Hey, at least you know that FXI will move with the Hang Seng.
iShares MSCI Brazil Index Fund (NYSE: EWZ): This is where the nasty surprises begin and its no surprise Brazil is leading the ugly charge. Heading into Monday, the Bovespa was down 24.3% year-to-date. On the other hand, the iShares MSCI Brazil Index Fund was down 31.4%. Just a theory, but maybe part of the reason for EWZ's nasty spill is because Brazilian markets are open while U.S. markets are. There are also a large amount of Brazilian ADRs trading in the U.S. Traders have been pounding many of those along with EWZ.
iShares MSCI Mexico Investable Market Index Fund (NYSE: EWW): Another wide chasm. The iShares MSCI Mexico Investable Market Index Fund is down 22% year-to-date compared to a 15.4% for Mexico's major index. If support at $48 doesn't hold, EWW could shed another 10% and as long as the U.S. economy appears, the investment thesis for Mexico is damaged.
iShares MSCI All Peru Capped Index (NYSE: EPU): Talk about a darling turned laggard. EPU was one of the best EM ETFs in 2010. This year, it has been a dud. Despite the political headwinds facing Peruvian equities, the country's General Sector Index is down “just” 20% this year. EPU is down 27% and is very close to violating support at $36.
iShares MSCI Taiwan Index Fund (NYSE: EWT): How China goes, Taiwan will usually follow. The TAIEX Index is down almost 22% this year. That plunge is surpassed by the iShares MSCI Taiwan Index Fund, which is off 25%.
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