Market Overview

Some EM ETFs Were Pretty Good In August

Some EM ETFs Were Pretty Good In August

Broadly speaking, August was another rough month for emerging markets ETFs, both the equity and bond varietals.

Increased speculation about imminent tapering of the Federal Reserve's quantitative easing program was one reason investors pulled $3.5 billion from emerging markets ETFs last month.

That brought the year-to-date redemption total from developing world equity funds to $11.1 billion, according to BlackRock.

Related: After Stellar July, ETFs Shed $15 Billion In August.

The iShares MSCI Emerging Markets ETF (NYSE: EEM) dropped 4.3 percent last month, a loss that looks tame in comparison to some single-country funds, particularly those offering exposure to India and Indonesia.

Indeed, August was another glum month for emerging markets ETFs, but that is a broad statement. Some developing world funds actually saw inflows last month while others delivered positive returns. Both traits could be signs of more positive things to come later this year. Consider the following ETFs.

EGShares Emerging Markets Consumer ETF (NYSE: ECON)
The EGShares Emerging Markets Consumer ETF did register negative returns last month, but through the end of the second quarter, ECON was easily ahead of some of its larger, diversified rivals. Not that ECON, which celebrates its third birthday this month, is small. ECON has over $1billion in assets under management because it has hauled in $367 million this year even as investors have raced out of comparable funds.

ECON brought in $41.6 million last month, although the fund was hampered by exposure to Mexico, India and Indonesia. Equities in those nations slid in August and that trio accounts for over a third of ECON's country weight.

WisdomTree China Dividend Ex-Financials Fund (NASDAQ: CHXF)
Though it may be getting lost in the negativity surrounding so many other emerging markets, some China ETFs have been gaining steam in recent weeks. It could be investors finally embracing compelling valuations or a recent batch of decent data out of the world's second-largest economy. Whatever the case may be, marquee China ETFs are perking up and looking good compared to some other investable Asian markets.

It should not be forgotten that some of the struggles endured by China funds this year were caused by liquidity concerns in the country's banking system, a scenario the WisdomTree China Dividend Ex-Financials Fund helps investors avoid by leaving banks out of its lineup.

CHXF gained 1.3 percent, but its upside has been accelerating with a 3.6 percent gain over the past week. Or has it? Since June 24 CHXF has surged 14 percent, putting it just ahead of the largest China ETF. And CHXF comes with a distribution yield of 5.37 percent.

For more on ETFs, click here.

Disclosure: Author owns none of the securities mentioned here.

Posted-In: Long Ideas Short Ideas Dividends Emerging Markets Specialty ETFs Emerging Market ETFs Markets Trading Ideas Best of Benzinga

 

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