The Emerging Markets Telecommunications ETF May Be What The Global Investor Needs To Hedge Against Risk
“Much has been publicized about adding emerging-market and, for that matter, general international exposure to one’s portfolio. After all, places like China, Brazil and Poland are all seeing high single- to low double-digit economic expansion in the near future. Exploding populations, higher incomes/discretionary spending and government prosperity programs are all hallmarks of the emerging market thesis. But after a banner year in 2009, the broad proxy for the market, the iShares MSCI Emerging Markets Index (NYSE: EEM) is struggling in 2010 and at one point sank nearly 7%. Individual emerging markets are fairing even worse. China (NYSE: FXI) was down 12% and Brazil (NYSE: EWZ) was down 16%,” Aaron Levitt Reports From Investopedia.
Levitt goes on to say, “Even with these downturns investors still need a dose of emerging markets in their portfolios. However, with recent events such as the Greece and Dubai debt problems fresh in many minds, risk control is taking first priority. But within a certain sector of the stock market, investors can find outsized dividends and a way to tap into all of that growing consumer demand. Telecommunications companies may just be what the global investor needs to hedge against risk. The nations with the fastest growing rates have all come from the developing world. Communication providers in these emerging markets are now tapping into the vast rural market places and are a direct play on an exploding demand. For example, in Africa, mobile phone penetration has skyrocketed. Just one in 50 people in 2000 had access to a mobile phone; today that number is closer to 28% of the continent’s total population. ”
“While emerging markets and dividends don’t generally go hand in hand, for the telecoms it’s a necessity. As a capital-intensive industry, one of the best ways to insure that investors will be there when you need to raise money is by offering dividends. The steady (by emerging market standards) free cash flows generated from their growing populations help pay for these distributions. Dividends can help cushion a portfolio in downturns, which in volatile emerging market settings, will occur. There is a closed-end fund that invests in this area. But, investors may want to skip the Emerging Markets Telecommunications Fund (NYSE: ETF) and invest in some of its individual holdings,” Levitt Reports.
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Here are some details on the Emerging Markets Telecommunications Fund (ETF) below:
The Emerging Markets Telecommunications Fund (ETF), Inc. operates as a closed-end, nondiversified management investment company. The fund invests in equity securities of telecommunication companies operating primarily in Asia and Latin America. Credit Suisse Asset Management, LLC serves as the investment adviser to the fund. The Emerging Markets Telecommunications Fund is based in New York, New York.