Philippines ETF (EPHE) Performs Decently, Despite Ongoing Turmoil

Short term headlines concerning the Philippines have been marred with incursions between IS affiliated terror groups and Filipino military forces, as the terror group is attempting to gain a foothold over the country, causing carnage in many villages and cities particularly in Marawi on the island of Mindanao.

There is one lone ETF in the “Philippines Equity” space known as EPHE (iShares MSCI Philippines, Expense Ratio 0.64%, $188 million in AUM), and the fund debuted back in September of 2010. We also can look at EEMA (iShares MSCI Emerging Markets Asia, Expense Ratio 0.49%, $369 million in AUM), where the Philippines only has a token weighting of 1.61% based on market capitalization (China is the largest single country holding at around 37.4%), expressing the emerging natures of the Philippines economy and stock market.

Year-to-date, it is clear that the growing terror threat is weighing on the Philippines, and perhaps holding it back when compared with other Asian economies, as EPHE is up about 11% compared to EEMA’s gain of 24% during this time frame.

EPHE still has seen decent inflows in the context of its overall asset base in 2017, reeling in about $28 million in new assets via creation activity.

A recent article from Bloomberg titled “Hopes High, Returns Low In Philippine Stocks Under Duterte” underscores some of what we are speaking of here and cites “Philippine equities gained 0.2% since Duterte assumed office.” The article also points out that the Philippine peso is literally the worst performing Emerging Market Asia currency since Duterte began his reign (which began nearly one year ago on June 30, 2016, with the peso having depreciated over 6% versus the U.S. Dollar).

Three individual industry sectors are reasonably evenly weighted in the current EPHE portfolio, with the Financial sector having the largest representation at 26% and followed by 24% weightings to Industrials and Real Estate respectively. Other sectors that are populated in the index are Telecommunications (7%), Utilities (7%), Consumer Staples (6%), Consumer Discretionary (4%), and Basic Materials (2%).

With fifty-one stocks currently in the portfolio, top individual equity holdings within EPHE are ordinary shares listed as follows: 1) Ayala Land Inc. (9.17%), 2) SM Prime Holdings Inc. (9.09%), 3) BDO Unibank Inc. (7.49%), 4) JG Summit Holdings Inc. (7.16%), and 5) Ayala Corp. (6.59%).


The iShares MSCI Philippines ETF (NYSE:EPHE) was trading at $36.29 per share on Wednesday afternoon, up $0.29 (+0.81%). Year-to-date, EPHE has gained 11.94%, versus a 8.92% rise in the benchmark S&P 500 index during the same period.

EPHE currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #62 of 76 ETFs in the Asia Pacific Equities Ex-China ETFs category.

Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.