Emerging markets and related exchange traded funds (ETFs) are at dirt-cheap prices, and it would be a shame to not capitalize on this opportunity.
ETFs are becoming a popular investment tool for investors to gain exposure to emerging markets by removing the onerous task of picking individual stocks, writes Tom Lydon for Stocks, Futures, and Options (SFO) Magazine.
This nifty tool allows for exposure to markets like the BRIC countries with ETFs such as Claymore/BNY BRIC (EEB), SPDR S&P BRIC 40 (BIK), or iShares MSCI BRIC (BKF). An investor may also focus on the individual countries which include:
- Brazil, iShares MSCI Brazil (EWZ), has a strong economy that can endure the global downturn. It also has a rising middle and has a stable political system. But, Brazil heavily relies on commodities which handicapped them last year when commodities plunged.
- Market Vectors Russia (RSX), is known for its reliance on oil and government corruption. This market is rather volatile but the undaunted investor would see that the country has an abundant natural resource, large foreign exchange reserves and growing consumer economy.
- India, PowerShares India (PIN), is a fast-growing economy rich in educated and intelligent people. It is expected that the resurgence in India will have companies scouring for employees. But the country is crowded and has a poor infrastructure system. It has limits on foreign investment which may constrain growth.
- China, iShares FTSE/Xinhua China 25 (FXI), is seen as too dependent on its exporting industry. It is the world’s third-largest exporter and is left unshielded against a stagnant global economy.For those intrigued by the BRIC countries or other emerging markets, ETFs can target a specific emerging market with a fund for that country and they can target a region or class of emerging markets with a broad-based fund.
The savvy investor should get ready for the time when the goddess of the markets once again graces us with her return. Our strategy notes that when a fund crosses above its trendline (the 200-day moving average), we’ll consider
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.