Credit: Shutterstock photoInvestorPlaceInvestorPlace - Stock Market News, Stock Advice & Trading Tips
If 2016 ended today, it might well go down as the year of the emerging markets renaissance. After several years of lagging developed markets, developing world equities are getting their groove back and doing so in significant fashion.
Source: Flickr
Just look at the widely followed MSCI Emerging Markets Index, to which $1.5 trillion in global assets are benchmarked. That index is up 17.7% year-to-date, or more than double the 8.3% returned by the S&P 500 . Cementing the notion that this is the year of the emerging markets comeback is this data point: Of this year's best exchange-traded funds, specific to single-country funds, nine of the top 10 non-leveraged country ETFs are emerging-markets funds .
The iShares MSCI New Zealand Capped ETF (NYSEArca: ENZL ) is the lone developed market fund among that set of ETFs. Some of these offerings have delivered whopping gains and we're not even eight full months into year, prompting some investors to wonder if the good times can continue.
Here, we'll examine five of 2016's best non-leveraged single-country ETFs, what has powered these funds higher this year and whether or not it is too late for investors to get involved.
World's Best ETFs: iShares MSCI All Peru Capped Index Fund (NYSEArca:EPU)
Expense Ratio: 0.63% annually, or $63 per $10,000 invested
Year-To-Date Gain:
Peru is not the largest Latin American economy - not even close. It is just a fraction of the size of regional behemoths such as Brazil and Mexico, but a lack of economic heft is not keeping the iShares MSCI All Peru Capped Index Fund (NYSEArca: EPU ) from being one of the best ETFs out there. In fact, the only ETF trading in the U.S. dedicated to Peruvian equities is this year's best single-country performer, and that includes emerging and developed markets.
In local currency terms , Peru's S&P Lima General Index - not the index tracked by EPU - is the world's best-performing equity index this year, with a gain of over 58%. The recent election of market-friendly President Pedro Pablo Kuczynski is cited as a catalyst for some of the strength in Peruvian stocks this year.
The fact that the markets are embracing Kuczynski is certainly helping EPU, but there are other factors at play and it somewhat answers the question about whether EPU can keep soaring. Peru is one of the world's largest silver producers and a big gold and copper producer as well. With gold and silver soaring, EPU is joining in on the fun, which makes sense as the ETF allocates over 50% of its weight to materials stocks.
Yes, EPU can keep rising, but much of that is dependent on silver prices .
World's Best ETFs: iShares MSCI Brazil Index (ETF) (NYSEArca: EWZ )
Expense ratio: 0.61%
YTD Gain:
Like its Brazil and Peru counterparts, the Global X MSCI Colombia ETF (NYSEArca: GXG ) is a top-flight emerging-markets fund in 2016 due to rebounding commodities prices and a stronger local currency.
Although it is not a member of the Organization of Petroleum Exporting Countries (OPEC), Colombia is one of South America's largest oil producers, meaning the economy there is highly dependent on crude exports.
In other words, the higher oil prices climb, the better things are for Colombian stocks and GXG.
Like Brazil, Colombia is trying to damp inflation and Colombia has the luxury of having far lower interest rates so the central bank there can be hawkish. Indeed, it has been. GXG has become one of this year's best ETFs in the midst of a streak of 11 consecutive months in which Colombia's central bank has boosted borrowing costs.
Colombia's benchmark lending rate is 7.75%, but the concern for GXG's ability to remain a best ETF is that June inflation figures were Colombia's highest in 16 years.
At the time of this writing, Todd Shriber did not own any of the aforementioned securities.
The post The World's 5 Best ETFs in 2016 appeared first on InvestorPlace .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
