A few weeks ago, we introduced the world to the next big thing
in
emerging markets acronyms
. That being CAPPT, which stands for Chile, Argentina (a frontier
market), Peru, the Philippines and Thailand.
Goldman Sachs (NYSE:
GS
), the venerable bank that gave the world BRIC, has added to
their catchy
emerging markets acronym lineup
with MIST. MIST countries are Mexico, Indonesia, South Korea and
Turkey.
Don't get us wrong. MIST's constituent countries represent
some compelling emerging markets opportunities. In particular, we
like Indonesia and Turkey, both of which also have a home in the
CIVETS acronym.
While the Market Vectors Indonesia Index ETF (NYSE:
IDX
), the largest and oldest of the three Indonesia-specific ETFs on
the market today, has been somewhat of a laggard this year, but
there's good reason to embrace
Indonesia and IDX
over the medium- to long-term.
As for Turkey and the iShares MSCI Turkey Investable Market
Index Fund (NYSE:
TUR
), there are
ample reasons to embrace this market and this
ETF
. Those reasons include a strong currency, favorable demographics
and a shrinking deficit.
Still, we felt compelled to see how our CAPPT acronym stacked
up against Goldman's MIST. In theory, MIST should have had an
advantage. After all, the "A" in CAPPT, Argentina, hasn't been
doing anyone any favors recently. Before today's 2% gain, the
Global X FTSE Argentina 20 ETF (NYSE:
ARGT
) was off more than 7% in the past week due to the Argentine
government's
nationalization tendencies
.
Using the four largest ETFs tracking MIST's markets - IDX,
TUR, the iShares MSCI Mexico Investable Market Index Fund (NYSE:
EWW
) and the iShares MSCI South Korea Index Fund (NYSE:
EWW
), the year-to-date returns through today are as follows: 5.12%
for IDX, 11.93% for EWY, 13.73% for EWW and 24.48% for TUR. That
works out to an average of 13.8%.
Not too shabby and certainly better than what the S&P 500
has delivered. There are still some concerns with MIST. First,
while Mexican equities and EWW have looked good this year, that
market has shown a noticeable correlation to U.S. stocks over
time. With concerning economic data popping up and "sell in May
and go away" almost here, perhaps U.S. and Mexican equities are
due for a breather.
It should also be noted that perhaps the only reason anyone
thinks South Korea is an emerging market is because MSCI hasn't
promoted it developed market status. South Korea is an OECD
member. FTSE, the World Bank and the International Monetary Fund
all gave South Korea developed market status long ago. It's only
a matter of time before MSCI does the same and that could hamper
EWY's returns.
As for CAPPT, ARGT is a drag, just as we thought. Through
today, the ETF is down 11.18% year-to-date. Each CAPPT member
only has one ETF devoted exclusively to it, so picking the funds
wasn't hard and this what we find in terms of year-to-date
returns with the remaining four: The iShares MSCI Chile
Investable Market Index Fund (NYSE:
ECH
) is up 16.26%, the iShares MSCI All Peru Capped Index Fund
(NYSE:
EPU
) is up 20.62%, the iShares MSCI Thailand Investable Market Index
Fund (NYSE:
THD
) has surged 21.71% while the iShares MSCI Philippines Investable
Market Index Fund (NYSE:
EPHE
) has soared 24%.
That has the CAPPT quintet up an average of 14.3% and that's
including ARGT's glum performance. What if we throw out the worst
performer from each group, IDX and ARGT? MIST, becomes MST and
the year-to-date average grows to 16.71%. CAPPT becomes CPPT and
the returns soar to 20.64%. In other words, CAPPT wins and it has
the potential to keep outperforming MIST going forward.
For more on emerging markets ETFS, please click
HERE
.
(c) 2012 Benzinga.com. All rights reserved. This material
may not be published in its entirety or redistributed without
the approval of Benzinga.