In what has been mostly a good year for emerging markets equities, the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO), the largest emerging markets exchange traded fund by assets, is higher by 10.5%.
VWO, a favorite among frugal investors and advisors alike due to its paltry annual fee, has the potential to deliver again in 2017.
Investors can still find some areas of opportunity, such as the emerging markets. The emerging markets have recently picked up momentum after years of underperforming developed markets, and the global segment remains relatively attractive.
Emerging markets remain attractively priced, with VWO showing a 13.7 price-to-earnings ratio and a 1.5 price-to-book. Emerging market assets have already struggled and may be past their lowest point. The EM segment could slowly improve from here with strengthening current account balances, rising commodity prices and better fundamentals.
Investors should note that VWO is adding China A-shares to its lineup. VWO does not track an MSCI index and that index provider is still mulling the inclusions of China A-shares to its emerging markets benchmarks.