Philippines ETF Could be Durable Compared to Rivals

The previously high-flying iShares MSCI Philippines ETF

, as has been the case with so many emerging markets funds in recent months, has been slammed by the impact of a weak currency and fears over imminent tapering of quantitative easing by the Federal Reserve. Over the past three months, EPHE is easily the worst performer in a group comprised of itself and the comparable Indonesia, Malaysia, Thailand and Vietnam ETFs. EPHE's declines have not altered what is still a strong medium- to long-term fundamental thesis for investing in the Philippines and it is those solid fundamentals that Citigroup highlighted in a recent bullish assessment of the Southeast Asian economy. Related:

. Robust domestic demand, healthy fundamentals and rising investments are among the factors Citi highlighted when it said the Philippines is vulnerable to Fed tapering and the slowing Chinese economy than other emerging markets,

. "The Philippines doesn't really come out as vulnerable to the taper in terms of fundamental indicators,” said Citi, citing the country's strong forex reserves, GMA reported. As for the slowing Chinese economy, a problem often blamed for the woes of myriad of emerging markets ETFs, the argument holds little water with EPHE. China is an important trading partner for the Philippines, though it ranks behind the U.S. and Japan on that list. Additionally, Philippine stocks

to their Chinese peers. In the past 12 months, EPHE is up two and a half times as much as the iShares China Large-Cap ETF

. Citigroup confirms as much, saying "Emerging markets, particularly Asia, are dependent on exports to China. But Philippines, again, is not that exposed." The bank forecasts Philippine GDP growth of seven percent this year and 6.8 percent in 2014. As for the weak Philippine peso, this is a scenario that is arguably overstated. In theory, a weak currency should not favor an unhedged ETF that tracks an economy that has

. However, Filipinos are the second-largest immigrant group in the U.S. behind Mexicans. Many of those Filipinos send money to dollars to family members back home and these days, those dollars buy more pesos. Said another way, Filipinos that receive remittances from family members living in the U.S. have arguably seen their purchasing power increase. Unfortunately, this has not been often overlooked element of the falling peso. Most financial analysts start and end the conversation at "The peso plunged and that is bad" while opting to ignore the potentially powerful impact of dollar-denominated foreign remittances. Although all are lower, in the past month EPHE has outpace the rival Indonesia and Malaysia ETFs. EPHE has not traded above its 200-day moving average since July. For more on ETFs, click