Signs of Hope For Emerging Market ETFs

The product has a Zacks Rank of 3 or’ Hold’ rating.

EGShares Emerging Markets Dividend Growth ETF (EMDG)

This is the new fund in the emerging market space targeting high income paying securities by tracking the FTSE Equal Weighted Emerging All Cap ex Taiwan Diversified Dividend Yield 50 Index (read: EGShares Launches New Emerging Market Dividend ETF).

In total, the product holds 50 securities in its portfolio, spread across a variety of sectors. Financial and energy take the top two spots at nearly 20% and 17%, closely followed by consumer goods (14.6%) and industrials (13.5%). From a national perspective, China (19.5%), South Africa (17%), Brazil (15.8%), and Indonesia (10.9%) take the top four spots.

The ETF has accumulated $2 million since its inception two months back and charges 85 bps in fees per year. Volume is also light. EMDG surged 4.50% on the day but lost 0.4% so far in the year.

First Trust Emerging Markets AlphaDEX Fund (FEM)

This fund provides a slightly active choice in the emerging market space as it uses AlphaDEX methodology to select the stock. The methodology seeks to narrow the developing nation space to only the best positioned companies. It ranks the stocks by various growth and value factors, eliminating the bottom ranked 25% of the stocks.

This approach produces a basket of 149 stocks, which is widely spread across each sector and security. Chinese firms dominate the portfolio with 31.22% share while Brazil, Thailand, Turkey, Poland and others get single-digit allocations.

The fund has amassed $154.3 million in its asset base while it trades in good volume of nearly 160,000 shares per day. The ETF charges 0.80% in expense ratio. FEM gained 3.6% on the day but is down 6.83% year-to-date.

Bottom Line

Emerging markets ETFs have faced tough times this year,as concerns over widening current account deficits, sluggish currencies, rising inflation and political disorder hits the shares in these nations (read: 3 Currency ETFs Crushed in Emerging Market Rout).

However, recent Chinese data and some positive news from across the emerging economies have been encouraging, suggesting that the worst might be over. This could help emerging stocks and the related ETFs to move higher at least in the near term.

This article is brought to you courtesy of Eric Dutram.

Pages: 1 2

Leave a Reply

Your email address will not be published. Required fields are marked *