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Emerging Markets Spur ETF Surge

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Don’t look now, but emerging markets have rediscovered their mojo. After declining more than 50 percent last year and leading global stocks into a freefall, emerging markets stocks now find themselves with a 35 percent year-to-date gain on average.

Broad-market emerging market ETFs like the iShares MSCI Emerging Markets Index Fund (EEM) and the Vanguard Emerging Markets ETF (VWO) have jumped higher along with concentrated funds like the SPDR S&P BRIC 40 ETF (BIK). BIK consists of just the four mega-emerging market countries — Brazil, Russia, India and China — known as BRICs.

Emerging markets are generally defined as countries that are in the process of maturing from an economic standpoint. Many of these countries are just beginning to respond to the spread of capitalism by accommodating more capital investment and supporting their local stock markets.

Resurging emerging markets stocks have also sparked the launch of new ETFs targeting them.

Barclays Global Investors (BGI) has launched the the iShares S&P Emerging Markets Infrastructure Index Fund (EMIF) and the iShares MSCI All Peru Capped Index Fund (EPU).

EPU is benchmarked to the MSCI All Peru Capped Index and holds the top 25 Peruvian equity securities by free-float adjusted market cap. Thirteen of the 25 index holdings are materials producers and top holdings are Buenaventura Minas, Southern Copper and Credicorp. The fund’s annual expense ratio is 0.63 percent.

In related news, the Emerging Global Shares Dow Jones Emerging Markets Metals & Mining Titans Index Fund (EMT) and the Emerging Global Shares Dow Jones Emerging Markets Energy Titans Index Fund (EEO) were both launched for trading.

EMT is linked to the Dow Jones Emerging Markets Metals & Mining Titans Index, which is composed of 30 emerging markets companies within the metals and mining industry sector of the global economy. The largest country weightings of EMT are South Africa, Brazil and China.

EEO is benchmarked to the Dow Jones Emerging Markets Oil and Gas Titans Index, which follows 30 stocks in the oil and gas sectors of Russia, China and other nations.

Ron DeLegge is the San Diego-based publisher and editor of and the radio host of the “Index Investing Show,” which is broadcast nationally on Saturday afternoons and can be heard online at Ron served as an investment and financial advisor for 11 years.


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