Four ETFs For The Chindia Boom
When it comes to investing overseas, there's no shortage of cute phrases and acronyms to be applied to various groups of countries. In Europe we have the PIIGS. Of course, BRIC has become perhaps the most ubiquitous emerging markets acronym of all, though CIVETS is no slouch either.
There's another one that highlights a well-known investment thesis: Chindia. Of course that means China and India, the world's two fastest-growing major economies.
China and India share plenty of anecdotes in common. They are the two largest countries in the world by population. One is the largest communist country in the world, the other is world's largest democracy. By area, they are the third- and seventh-largest countries in the world, respectively. China is expected to become the world's largest economy at some point, but some economists believe India will take that crown two decades later.
The ETF industry has tapped into the Chinese and Indian growth stories in a major way as there are nearly 230 ETFs listed in the U.S. that offer exposure to China and almost 110 that feature India. Some are even heavy on both countries, presenting indecisive investors looking for Chindia exposure with some compelling options. Here are some Chindia funds to look at right now.
First Trust ISE Chindia Index Fund (NYSE: FNI) The First Trust ISE Chindia Index Fund has been around almost five years, but it can still sport the honor of being THE Chindia ETF. That's right, FNI is devoted entirely to China and India. That was really bad news in 2011, but in 2012, FNI is up almost 23% year-to-date. Technology stocks account for over 35% of FNI's weight and that means some names that are familiar to U.S. investors such as Baidu (NYSE: BIDU) and Infosys (Nasdaq: INFY).
For those that have missed FNI's recent rally, take a look at the ETF again if it crosses $23 on strong volume. FNI has almost $100 million in AUM and is home to 50 stocks.
EGShares Financials GEMS ETF (NYSE: FGEM) After FNI, the Chindia quest becomes about finding ETFs that over heavy combined exposure to both countries and FGEM fits that bill as China and India represent over 48% of the ETF's weight. Brazil also figures prominently in FGEM's country weight with an 18.1% allocation, so it can be said this is a BIC ETF, too. Emerging markets and banks together were downright ugly last year but as the market starts rewarding risk again, FGEM could add to its already stellar 2012 performance.
SPDR S&P Emerging Asia Pacific ETF (NYSE: GMF) There's a slew of Asia Pacific ETFs on the market. Plenty of them have some specialized niche such as ex-Japan or emerging markets. For some reason, and we don't know exactly what it is, many of these ETFs lack significant India exposure. Under-the-radar play GMF does not. Combine China and India and those countries represent almost 54% of GMF's weight.
Throw in Taiwan and there's over 81% of GMF's country exposure. For an ETF with GMF's recent track record and considering it has over $492 million in AUM, GMF doesn't grab a lot of attention, but it's a valid Chindia play.
EGShares Industrials GEMS ETF (NYSE: IGEM) Let the horn tooting begin. We highlighted IGEM in early January. Since then the ETF has gained about 20%. As we said, IGEM will not any popularity or volume contests anytime soon, but it's recent returns are hard to argue with. Chindia exposure: 46.5%.
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