In the past, some exchanges in emerging countries have completely shut down. By looking at sectors and diversifying across a number of different markets, the exposure to liquidity issues can be cushioned.
Richard Kang, chief investment officer and director of research and Emerging Global Advisors, noted that investors’ tastes when it comes to ETFs, as well as how they use them, appears to be shifting. By looking at the trading volume for some of the largest broad-based ETFs, “It must be a short holding period. If that’s true, we’ve evolved in that the ETF industry is a transitional or hedging tool.”
Now that the major indexes have been adequately covered by the ETF industry and investors are increasingly becoming more sophisticated and more tactical, the next wave is quickly shaping up to be products that focus on new and interesting strategies and markets, including hedge fund replication, commodities and inverse funds.
Emerging Global Shares’ website will go live later today.