Beyond BRICs ETFs Less Bad to Start 2014
January 13th, 2014 at 7:00am by Todd Shriber
After a year full of disappointment in 2013, it has been more of the same for BRIC exchange traded funds in 2014.
The iShares MSCI BRIC ETF (NYSEArca: BKF) and the Guggenheim BRIC ETF (NYSEArca: EEB) are off an average of 3.6% to start the new year. When it comes to the four major single-country BRIC funds, the 2014 performances have been so dismal that the WisdomTreee India Earnings ETF (NYSEArca: EPI) is the best of the lot with a loss of 2.2%. [Getting Selective With Emerging Markets]
Ongoing struggles for ETFs tracking Brazil, Russia, India and China come even as scores of analysts, banks and strategists reiterate that emerging markets equities are inexpensive. In fact, Chinese and Russian shares are among the most deeply discounted in the developing world. Russian stocks, which usually trade at a discount to the MSCI Emerging Markets Index, are now so inexpensive that they trade at discounts to their own 10-year averages. [Some Country ETFs are Dirt Cheap]
Attractive valuations have not been enough to spur BRIC ETFs higher this year, but those slack performances may offer a silver lining for prescient investors. That being the opportunity to evaluate a pair of new beyond BRICs ETFs.
The pair is comprised of the EGShares Beyond BRICs ETF (NYSEArca: BBRC), the older of the two funds, and the SPDR MSCI EM Beyond BRIC ETF (NYSEArca: EEMB). Neither ETF has posted a jaw-dropping gain to start 2014, but both are modestly higher and that is something of an accomplishment relative to BRIC and traditional, diversified emerging markets funds.
There are key differences between BBRC and EEMB. For example, BBCR allocates about a third of its weight to Mexico and South Africa while lower beta markets South Korea and Taiwan combine for almost 31% of EEMB.