China remains an economic behemoth that dominates the broad
emerging market discussion. For good reason too, as the nation is
currently the 2
largest economy in the world and is expected to pass the U.S. in
terms of total GDP within a decade.
Still, many are starting to grow quite concerned over the
short-term health of the Chinese market. Debt concerns are
building over local municipalities while the inability of China
to focus more on consumption leaves the nation dangerously
dependent on exports, many of which go to countries-especially
those in the EU-which are at or already in a recession.
If that wasn't enough, a general slowdown is already starting
to afflict the China market as well, leaving the country even
more dependent on stimulus to jumpstart growth prospects.
However, it remains to be seen how the new Chinese leadership
will handle this crisis and how they can boost growth without
increasing inflation to intolerable levels (read
Forget FXI: Try These China ETFs Instead
Given these trends, some investors are beginning to reconsider
their investment in China, at least in the short-term.
Fortunately with the rise of Exchange-Traded Funds, exposure to
various emerging markets beyond the People's Republic is quite
now exist that represent a variety of small markets that
investors were once unable to tap into. This is great news for
those seeking emerging market holdings that go beyond China as
several of these markets are still going strong and could be
poised for solid returns in the months ahead as well.
In light of this, we have highlighted three of the top ETFs
that are tracking emerging markets from around the world. Not
only have all three of these ETFs been solid performers, but they
all receive a Zacks ETF Rank of 2 or better, suggesting that,
according to our analysis, they are poised to outperform their
peers in the short to medium time frame.
The entire Southeast Asian market has done quite well so far
in 2012, although Thailand has certainly led the way. The country
has rebounded from severe floods and riots to be a king in terms
of market returns with the country expected to grow at a robust
7.5% rate in 2013
In order to target this market, ETF investors should look to
the solid performer of the MSCI Thailand Investable Market Index
) for exposure. The ETF holds 85 stocks in its basket and charges
investors 59 basis points a year in fees (read
Is the Thailand ETF Unstoppable?
The ETF is concentrated on financials (38%), but energy
(19.9%), and materials (11%), also receive double-digit
weightings as well. While the yield isn't too impressive at 1.9%
in 30 Day SEC terms, the performance has been solid as the
product has risen by over 22% in the past 52 week period.
Currently, THD receives a Zacks ETF Rank of 1 or 'Strong
For investors seeking South American exposure, a closer look
at the Chilean market could be a great idea. The nation is
heavily focused on commodities which have been doing well as of
late, while despite the slowdown in some markets, growth rates
have been holding up quite well, suggesting that the Chilean
economy is more immune to global shocks than some might
For investors who want this market in their portfolio,
the MSCI Chile Investable Market Index Fund (
is a great choice. The product holds just 40 securities in its
basket and charges investors 59 basis points a year in fees (
Andean ETFs: A Better Way To Play Emerging
In terms of sector exposure, assets are well spread out as
utilities and industrials both make up slightly more than 20%
while financials and materials also account for over 15% each as
well. ECH has been much more volatile and its yield comes in at
just 1.7%, but it could be presenting a solid value to investors
looking for a Latin American play at this time.
Currently, ECH receives a Zacks ETF Rank of 2 or 'Buy'.
While some may not consider South Korea to be an emerging
market any more, many do, suggesting that the country is a lower
risk choice in the broader developing market world. Unlike many
markets in the region, inflation is quite low while rates are
still reasonable, meaning that the central bank still has plenty
of tools at its disposal to help keep growth rates at a solid
Access to this market can easily be achieved by iShares' ultra
MSCI South Korea Index Fund (
. This product has close to $3 billion in AUM, holds just over
100 stocks, and like the other two ETFs on this list, charges 59
basis points in fees per year (read
South Korea ETF Investing 101
Top sectors for this fund include a nearly 32% allocation to
technology and then an 18% weight to consumer discretionary,
while industrials, financials, and materials all have a double
digit weighting as well. Yield is rather low on this fund, but it
does offer up an exposure profile that is quite different from
others in the country-specific ETF world and it has performed in
line with the S&P 500 over the past 52 weeks, although it has
outperformed in the most recent quarter.
Currently, EWY receives a Zacks ETF Rank of 1 or 'Buy'.
Want the latest recommendations from Zacks Investment
Research? Today, you can download
7 Best Stocks for the Next 30 Days
Click to get this free report >>
ISHARS-MSCI CHL (ECH): ETF Research Reports
ISHARS-S KOREA (EWY): ETF Research Reports
ISHARS-FT CH25 (FXI): ETF Research Reports
ISHRS-MSCI THAI (THD): ETF Research Reports
To read this article on Zacks.com click here.
Want the latest recommendations from Zacks
Investment Research? Today, you can download 7 Best Stocks for
the Next 30 Days. Click to get this free report