As the markets experienced severe volatility the last few weeks, emerging-market and materials exchange traded funds (ETFs) have suffered worse than most. A couple of examples include the iShares MSCI Emerging Markets Index (EEM) and the WisdomTree International Basic Materials (DBN). This should not come as a surprise for two reasons, says Roger Nusbaum for Random Roger’s Big Picture:

  1. Emerging-market and materials ETFs have outperformed the market for a long time now.
  2. They’re considered riskier investments, and as such, investors tend to get rid of their riskiest investments first.

However, as of the market low on Aug. 15, EEM and DBN have come back significantly faster than the S&P 500. Granted, these ETFs are far from their original highs, but they illustrate the point of ETFs that get hit the hardest tend to bounce back the best.

Emergingmarket_etf_chart

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. 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.