Emerging Markets Small Cap ETFs: An Investment With High Risk But Rapid Returns

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May 6, 2011 11:10am NYSE:DGS NYSE:EWX

Emerging markets operate new environments, with new challenges and unique models for investment. Despite the risk and the toughness, emerging markets have an interesting potential

 to grow rapidly. Small Cap emerging market funds are going to be the some of the fastest growing but potentially most volatile of the emerging market alternatives.

Emerging Market Small Cap


Description Symbol 1 Yr 3 Yr 5 Yr Avg. Volume(K) 1 Yr Sharpe
Wisdomtree Emerging Mkts Small (DGS) 27.65% 11.91% NA 179 121.55%
Guggenheim Frontier Markets (FRN) 15.44% NA NA 139 77.14%
SPDR S&P Emerging Markets Small (EWX) 11.76% NA NA 141 57.65%

Wisdomtree Emerging Mkts Small (NYSE:DGS) has this time a strong returns, investing the major part of the fund in the Industrial, Financial, and Consumer Discretionary Sector (22%, 28% and 17.5%, respectively). This fund invest mostly in Taiwan, Korea, South Africa and Thailand.

Following, the Guggenheim Frontier Markets ETF (NYSE:FRN), which 80% of the assets of the fund is invested in American depositary receipts (“ADRs”) and global depositary receipts (“GDRs”). The investments are made in what is called “Frontier Markets”, with the participation of developing markets such as Chile, Colombia and Egypt.

Finally, SPDR S&P Emerging Markets Small Cap (NYSE:EWX) has the lowest figures among the three showed. This fund invest in Emerging Markets included in the S&P Global BMI Index, tracking all the stocks in developed and emerging markets with float-adjusted market capitalization of at least $100 million.

Major Asset Classes Trend


Description Symbol 1 Week 4 Weeks 13 Weeks 26 Weeks 52 Weeks Trend Score
Gold (GLD) 3.84% 9.46% 16.96% 14.89% 32.08% 15.45%
Commodities (DBC) 0.6% 3.84% 13.56% 26.69% 30.52% 15.04%
US Equity REITs (VNQ) 3.07% 5.58% 10.39% 15.42% 22.62% 11.42%
International REITs (RWX) 2.78% 5.26% 8.35% 10.35% 28.26% 11.0%
US Stocks (VTI) 2.01% 2.4% 7.85% 18.72% 19.58% 10.11%
Emerging Market Stks (VWO) -0.22% 1.71% 9.98% 12.03% 24.84% 9.67%
International Developed Stks (EFA) 2.24% 4.63% 7.69% 12.36% 17.73% 8.93%
International Treasury Bonds (BWX) 2.13% 4.92% 7.23% 4.15% 15.65% 6.82%
US High Yield Bonds (JNK) 0.47% 1.72% 3.59% 7.88% 14.77% 5.68%
Frontier Market Stks (FRN) 1.76% 3.07% 4.61% -2.58% 16.42% 4.66%
US Credit Bonds (CFT) 0.82% 1.63% 2.31% 0.68% 6.89% 2.47%
Emerging Mkt Bonds (PCY) 0.75% 1.2% 3.07% -2.83% 8.87% 2.21%
Mortgage Back Bonds (MBB) 0.71% 1.15% 1.49% 0.91% 4.89% 1.83%
Total US Bonds (BND) 0.65% 1.34% 1.47% -0.02% 5.4% 1.77%
Intermediate Treasuries (IEF) 1.08% 1.62% 1.07% -2.91% 7.4% 1.65%
Municipal Bonds (MUB) 0.98% 2.22% 3.32% -1.75% 1.43% 1.24%
Treasury Bills (SHV) -0.01% 0.03% 0.08% 0.1% 0.17% 0.07%

Analyzing the major assets class trend, it can be seen that the stocks in the Emerging Markets (NYSE:VWO) have an interesting trend score, taking a strong position in the middle top table, with figures closer to the US Stocks (NYSE:VTI).

Emerging Markets Small Capitalization represent a good investment for those who do not have problems on risking some money in the short term, and are willing to produce high yields taking into account a smaller period of time.

Written By The Staff Of MyPlanIQ.com

LTI Systems, Inc. is the operator of MyPlanIQ.com and ValidFi.com. The founders of LTI Systems have extensive technology and business background in computer and semiconductor industries. They have been using the strategies provided by MyPlanIQ for their own personal retirement and taxable investments. The mission of LTI Systems is to make wealth management investment strategies that are used to be only accessible to institutions and high net worth individuals available to private investors with a fraction of flat cost and ease of use. The founders of LTI Systems, investors themselves, take pride in creating such a system and service for investors by taking the perspective from the investor side. They are using the system and the strategies for their own investment and align their interests with their customers.  

MyPlanIQ’s blog provides periodical articles to discuss issues related to retirement plans (401(k), 403(b) and IRAs), deferred compensation plans (457), college savings plans (529), taxable brokerage investment accounts, variable annuities and universal life insurance plans. It also covers investment strategies, specifically strategic and tactical asset allocation and investment products such as ETFs and mutual funds. In addition, it syndicates daily articles that are related to retirement planning, personal finance, investment strategies, annuities, insurance, college savings and market/economic outlooks. It provides a comment and discussion community for readers.

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