Last month, we evaluated
several ETFs that are chock full of high P/E
stocks or funds that have high P/E/ themselves
. At the time, we noted that since various fund sponsors employ
different methodologies when coming up with an ETF's P/E ratio
and that calculating a large fund's weighted P/E can be a
cumbersome task, an ETF's P/E ratio isn't always as instructive
as an individual stock's.
Well, sometimes it can be. The current market environment
isn't conducive to owning stocks or ETFs with rich valuations and
that much has been proven by the performance of the high P/E
funds we recently profiled. All are down in the past month, with
the SPDR S&P Semiconductor ETF (NYSE:
) leading the way with an 8.4% tumble.
Given that level of success with using the P/E ratio to find
ETFs that might be vulnerable to declines, we're now flipping the
script and looking for funds that appear cheap and could prove to
worth a look for prescient investors.
SPDR S&P Small Cap Emerging Asia Pacific ETF (NYSE:
The SPDR S&P Small Cap Emerging Asia Pacific ETF has garnered
only minimal attention since its January
and in a market where emerging markets equities and small caps
have been repudiated, it's easy to see why the fund now sports a
GMFS has tumbled 10% in the past month and now trades for less
than 10 times the forecasted fiscal year EPS of its constituents.
That implies GMFS, which is home to 495 stocks, is far cheaper
than the large-cap focused iShares MSCI Emerging Markets Index
) and the Vanguard MSCI Emerging Markets ETF (NYSE:
). Taiwan, China and India combine for over 75% of GMFS' country
SPDR S&P Oil & Gas Equipment & Services ETF
Highly correlated to the price of crude, it's no surprise that
the SPDR S&P Oil & Gas Equipment & Services ETF and
rival funds such as the Market Vectors Oil Services ETF (NYSE:
) and the iShares Dow Jones U.S. Oil Equipment & Services
Index Fund (NYSE:
) have been decked in the past month as West Texas Intermediate
futures have fallen about 20%.
To its credit, XES has been the best performer of that trio
since early May and one reason for that might be the ETF's more
even distribution among its holdings. IEZ and OIH are heavily
allocated to Schlumberger (NYSE:
), National Oilwell Varco (NYSE:
) and Halliburton (NYSE:
). Regarding XES, no stock receives a weight north of 3.22%. As
for valuation, XES has a P/E of 10.47, barely more than half that
EGShares Low Volatility Emerging Markets Dividend ETF
Unheralded HILO is deserving of a place at the top of any
list pertaining to emerging markets dividends
. An index yield of 6.44% says as much.
Here's what's interesting to note about HILO right now: No, it
has not been the best performer in the past month, losing 11%.
However, that's better than what the iShares Brazil Index Fund
) and the iShares FTSE China 25 Index Fund (NYSE:
) have offered and HILO's current P/E of just over 9 is cheaper
than the FXI, EWZ and the iShares MSCI South Africa Index Fund
). Those three countries account for about 48% of HILO's
Market Vectors Russia ETF (NYSE:
In some ways, the Market Vectors Russia ETF embodies the problems
of all the funds mentioned here. That is to say the largest and
oldest Russia ETF on the market has been slammed not only because
it's an emerging markets ETF, but also because it's a commodities
ETF. Russia is the largest non-OPEC oil producer and oil is the
biggest contributor to the government's coffers.
There's no getting around the fact that the returns offered by
RSX and its rivals have been putrid in the past month. There's
also no getting around the fact that
that there are some signs bears are lightening up
on RSX and that Russian equities are now cheap
. That's cheap relative to the other BRICS and the emerging
markets universe at large.
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