Some EM Sector ETFs Could Soar in 2013

Page 1 of 2

Well-documented was the rise of diversified emerging markets ETFs in 2012. Multi-country funds such as the iShares MSCI Emerging Markets Indx (NYSEARCA:EEM) and the WisdomTree Emerging Markets Eqty Incm Fd (NYSEARCA:DEM) delivered solid returns while attracting a steady stream of new assets from investors.

iShares Dow Jones US Home Const. (ETF) (NYSEARCA:ITB)

Country-specific funds such as the those tracking the Philippines and Turkey got in on the act as well, delivering jaw-dropping returns.

Just a few trading days into 2013, emerging markets ETFs are extending their 2012 gains as EEM and DEM are in the green and some country funds such as the Market Vectors Vietnam (NYSEARCA:VNM) have already set a torrid pace.

Amidst all the ebullience, emerging markets sector ETFs can go overlooked. Ignoring these sector funds in 2013 could prove to be a mistake because some have already outperformed traditional diversified and country-specific developing markets ETFs. With that in mind, consider the following ETFs as the among the best bets at sector level in the developing world this year.

EGA Emerging Global Shares Trust (NYSEARCA:EMDD) The EGShares Emerging Markets Domestic Demand ETF is more of a thematic concept than a sector-specific play. That theme, as EMDD’s name implies, is a goal of a plethora emerging markets, both large and small: Increased domestic consumption.

While rapidly rising export numbers can be seductive, a heavy dependence on exports exposes any country to the economic woes of its trading partners. Just ask Australia, Brazil and on and on. Is it possible for a developing economy to be focused on domestic consumption while growing in size? The answer is yes. Just look at Indonesia, Southeast Asia’s largest economy, where domestic consumption represents 60 percent of GDP.

Regarding EMDD, the ETF is one way of avoiding a misguided approach to tapping into the emerging markets consumer theme. That being the flawed thinking that Western multinationals are the way to play rising middle classes in the developing world. In reality, many emerging markets consumers prefer the brands they have known their whole lives.

At the sector level, EMDD is fairly conservative as the fund is heavy on food and beverage and telecommunications names. EMDD does offer a direct avenue to the expected vibrancy of Asia’s local demand story over the coming years. India and China combine for over 30 percent of the fund’s weight. EMDD also features smaller allocations to Indonesia, Malaysia, Thailand and the Philippines. EMDD has returned 12.3 percent over the past six months.

Global X China Consumer (NYSEARCA:CHIQ) In early October 2012, the Global X China Consumer ETF was identified as one China fund beyond the usual suspects that could benefit from a rebounding Chinese economy and government stimulus efforts. Since then, CHIQ has jumped 13.6 percent.

With retail and food names combing for over 41 percent of CHIQ’s weight, the ETF is heavily exposed to Chinese consumers’ everyday needs. Being exposed to the Chinese consumer at all is not such a bad thing, particularly for patient investors.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits In The World

10 Worst Airlines in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!