The emerging markets have not been the hottest place to invest
past year as they began to lag the developed markets. The iShares
MSCI Emerging Market ETF (NYSE:
) is down six percent in 2013 versus a gain of 16 percent for the
SPDR S&P 500 ETF (NYSE:
Individual emerging market country ETFs have performed even
this year, with several hitting new 52-week lows. So why in the
world would an investor even considering investing in the asset
For starters, the valuations for the emerging markets have
come down to attractive levels versus the developed markets and
the growth potential remains above average.
There is also the fact that not all emerging market countries
are the same and not all ETFs are created equally. This is where
the one emerging market ETF to own is introduced.
The EG Shares Emerging Markets Consumer ETF (NYSE:
) is a basket of 30 stocks that are in the consumer goods and
The top countries represented include Mexico, South Africa,
Brazil, India, and Chile. In 2013 the ETF is up two percent,
easily beating the benchmark, MSCI Emerging Markets Index. Going
back to the beginning of 2012 the ETF is up 23 percent versus a
gain of nine percent for EEM.
The reason for the outperformance is simple.
The companies in ECON cater to the local customer, whereas EEM
is composed of companies that are multinationals and generate a
majority of their business around the globe.
As the middle class continues to expand in the emerging
markets, the locals will have the ability to spend more
disposable income and the beneficiaries will be the local
retailers. ECON is the best-positioned play for the true growth
of the emerging markets.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
Free Trading Education -
Check out the free events taking place on Marketfy
this week. Spaces are limited. Sign up today.