ETF Trends
ETF Trends

During the past few years, Asian markets made landmark moves and the exchange traded funds (ETFs) that track them performed beautifully. The Asia ex-Japan stock category rose 60% year-to-date, 43.5% in the past three years and 35.4% over the past five years, according to Morningstar data. Trang Ho for Investor’s Business Daily reports that China, Greater China and Hong Kong funds accounted for 47% of all flows into Asia ex-Japan stock funds. Asia’s economy is expected to grow at a rate of 6% on average. China and India are expected to have the fastest growth at 9% and 11% over the next few years.

However, some Asia Pacific region ETFs don’t offer as much exposure as their name suggests. The following three ETFs are heavily weighted in Australia. Exposure to China and other Asian countries is sparse:

  • iShares MSCI Pacific ex-Japan (EPP)
  • WisdomTree Pacific ex-Japan (DND)
  • WisdomTree Pacific ex-Japan Hi-Yield Equity (DNH)

These ETFs have heavier weightings in traditional Asian countries:

  • PowerShares Dynamic Asia Pacific (PUA) – is most heavily weighted in Hong Kong at 36%, followed by Australia at 27%, Singapore at 17% and China at 14%.
  • PowerShares FTSE RAFI Asia Pacific ex-Japan (PAF) – Hong Kong and Australia each hold 43%. Singapore has 19%.
  • PowerShares FTSE RAFI Asia-Pacific-ex-Japan Small-Mid Portfolio (PDQ) – Hong Kong has 38%, Australia comes in at 32%, Singapore at 19% and New Zealand at a minimal 4%.

For full disclosure, some of Tom Lydon’s clients own DND.

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.