Thursday may not be the day to revisit this particular topic
as plenty of marquee emerging markets
are trading lower on the day.
However, the past month has brought something of a modest
resurgence for select emerging markets ETFs with many of the
group's most popular names either eking out small gains or
managing to be noticeably less bad than they have been for most
of this year.
Federal Reserve tapering fears have ebbed a bit and some
emerging markets central banks, though not those in Brazil and
India, remain committed to accommodating monetary policy giving
investors some reason to at least consider developing market
Although economic growth is slowing in China this year, growth
is seen rising in other BRIC nations and South Africa and South
Korea in 2014
providing a possible catalyst for patient
One ETF that capitalizes on the
ultra-popular low volatility theme
stands out as a way for investors to get involved with emerging
markets right now without losing sleep. That fund is the
PowerShares S&P Emerging Markets Low Volatility Portfolio
Around here, we've been fans of EELV for a while, going back
to a time when the ETF still lived life below the overrated $100
million in assets under management mark. In December 2012, the
$86.5 million in assets
. It now has $162.5 million, almost doubling its total in what
has been a dismal year for emerging markets ETFs.
EELV and the rival iShares MSCI Emerging Markets Minimum
Volatility ETF (NYSE:
) have both significantly increased their AUM totals this year
indicating that while investors have withdrawn billions from
other emerging markets ETFs, some of those dollars have flowed to
low volatility products. EEMV's AUM total is about two-and-half
times larger today than it was around Christmas 2012.
The secret to EELV's potential allure to conservative
investors really is not a secret at all. Just as sector weights
can make significant differences with broad market ETFs and just
as varying weights to the same stocks can make for varying
returns with sector funds, country allocations can make all the
difference with emerging markets ETFs.
EELV is down just three percent in the past three months while
some larger, diversified rivals are sitting on the double-digit
losses and that performance gap is explained by what countries
EELV includes and excludes.
The fund's thin BRIC exposure
has previously been highlighted
as one of its primary advantages. Current combined exposure to
China and Brazil is about 12 percent with no weights to India or
As important as what EELV excludes at the country level is
what it includes. That being a combined 40.5 percent weight to
Taiwan and Malaysia, two Asian markets with low-beta reputations.
Not only are Malaysia and Taiwan perceived as less volatile than
other developing markets,
the corresponding single-country ETFs
have recently been among the best performers tracking Asian
The wild card in EELV's lineup is South Africa at a weight of
12.8 percent. South Africa's status as a major precious metals
producer levers stocks there gold, platinum and palladium prices.
On the other hand, if a bottom is really in for gold, EELV could
benefit. As it is, the iShares MSCI South Africa ETF (NYSE:
) has traded slightly higher over the past month.
For more on ETFs, click .
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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