The Mess of Emerging Markets ETFs

January 6th at 1:53pm by Todd Shriber

Monday is just the third trading day of 2014, so the optimistic view is that emerging markets exchange traded funds, most coming off dismal performances in 2013, can get it together this year. Still, the start to the new year is less than inspiring.

Assuming down days Monday, the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO) and the iShares MSCI Emerging Markets ETF (NYSEArca: EEM), the two largest emerging markets ETFs, will have started 2014 on three-day losing streaks. That after data indicate investors pulled $11.5 billion from emerging markets funds in the fourth quarter. [Investors Continued Pulling Cash from EM ETFs in 2014]

Noted technical analyst Ralph Acampora points out that EEM has broken down and that its next support area is around $37.27. The ETF currently trades around $39.80 and has not closed below $37 since the second quarter of 2012.

Other marquee emerging markets ETFs that have not started 2014 on the right foot include the iShares MSCI Brazil Capped ETF (NYSEArca: EWZ), which is trading at its lowest levels since September. Like EEM and VWO, the iShares China Large-Cap ETF (NYSEArca: FXI) is poised for a three-day losing streak while the iPath MSCI India Index ETN (NYSEArca: INP) is off 3.2% in the past week.

After being the worst performer among the four major single-country BRIC ETFs last year with a  loss of nearly 18%, EWZ is the best of the quartet this year, though that is not saying much as the ETF is lower by nearly 3%.

Although hopes are in place for a rebound in Latin America ETFs in 2014, the group’s start to the year has been less than encouraging as EWZ and the comparable Chile and Mexico ETFs are all off close to 3%. [LatAm ETFs Look to Rebound in 2014]

Emerging markets ETFs shed almost $2.85 billion last month with Brazil and Mexico ETFs among the worst offenders, according to iShares data.

Tom Lydon’s clients own shares of EEM.