Can The Gains Continue To Grow For Emerging Markets ETFs? (EEM, VWO)

“Emerging market stocks are on a roll, but their most recent streak has come after a long, rocky ride – volatility that market watchers say could soon return. The MSCI Emerging Markets Index has finished positive in seven of the last 10 sessions, including five consecutive closes in the black. The gains coincided with an uptick in commodities prices and news of growth abroad,” Elizabeth Trotta Reports from Smart Money.

Trotta goes on to say, “Although industry experts are largely positive about emerging markets in the long term, some caution investors not to grow too comfortable with the latest gains. In the near-term, if more countries come forward with deep economic problems, such as the debt situations that have rocked Greece and Hungary, investors could look to scale back their risk, creating short-term weakness in emerging markets, says Chad Deakins, portfolio manager of the RidgeWorth International Equity Fund. Emerging markets have already been pressured this year. As of Friday’s close, the iShares MSCI Emerging Market Index fund (NYSE:EEM) was off by 6.6% for the year, compared with a 2.1% decline in the S&P 500 index. Vanguard’s Emerging Markets Stock ETF (NYSE:VWO) was down 5.1% for the year.”

“Yet investors have continued to place bets on developing economies. Emerging market funds have managed to attract more than $2.5 billion in new money in each of the first four months of the year, except February ($1.3 billion), for a total of $9.6 billion, according to the Investment Company Institute. By comparison, emerging markets netted just $2.0 billion during the first four months of 2008, and $1.2 billion during the first four months of 2009. Emerging markets are continuing to draw attention because they make up a larger part of global gross domestic product than other countries relative to their market cap, says Deakins. Investors are betting that in time there will be “an equilibrium,” meaning these countries will realize their production growth in market cap, he says,” Trotta Reports.

Here are some more details we have put together on the 2 emerging markets ETFs below:

iShares MSCI Emerging Market Index fund (NYSE:EEM)

The investment seeks investment results that correspond generally to the price and yield performance of the MSCI Emerging Markets index. The fund generally invests at least 90% of assets in the securities of the underlying index or in ADRs and GDRs representing such securities. The index was developed by MSCI as an equity benchmark for international stock performance. It is nondiversified.

TOP 10 HOLDINGS ( 18.49% OF TOTAL ASSETS)  
 
Company Symbol % Assets
  (SMSN) 2.93
Taiwan Semiconductor Manufactur (TSM) 2.01
POSCO Common Stock (PKX) 1.93
  (00941) 1.84
  (OGZPY) 1.83
Chunghwa Telecom Co Ltd America (CHT) 1.64
  (RIODF) 1.61
Itau Unibanco Banco Holding SA (ITUB) 1.60
Petroleo Brasileiro S.A.- Petro (PBR) 1.55
  (OGZPY) 1.55

 

Chart foriShares MSCI Emerging Markets Index (EEM)

Vangaurd Emerging Markets Stock ETF (NYSE:VWO)

The investment seeks to track the performance of the MSCI Emerging Markets index. The fund employs a passively managed investment approach by investing all or substantially all of assets in a representative sample of the common stocks included in the MSCI Emerging Markets index. This index includes approximately 748 common stocks of companies located in emerging markets around the world.

TOP 10 HOLDINGS ( 14.47% OF TOTAL ASSETS)  
Company Symbol % Assets
AMERICA MOVIL-L AMXL.MX 1.4
China Construction Bank Corporation N/A 1.23
China Life Insurance Company, Ltd. N/A 1.12
China Mobile Ltd. N/A 2.03
Gazprom OAO (EDR) N/A 1.91
Industrial & Commercial Bank of China N/A 1.18
PETROBRAS -PN PETR4.SA 1.34
PETROBRAS -ON PETR3.SA 1.12
Samsung Electronics N/A 1.7
Teva Pharmaceutical Industries Ltd N/A 1.44

Chart forVanguard Emerging Markets Stock ETF (VWO)

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