ETF Trends
ETF Trends

As the global economy as metamorphosed, a number of these changes have resulted in a flood of opportunities for exchange traded funds (ETFs). This is especially true when it comes to those that target emerging markets.

Emerging markets are in a position to strengthen themselves against the developed world.  Of the emerging nations, China is by far the largest and recently its stock market capitalization surpassed that of Japan’s, which is the second-largest economy in the world. China is expected to surpass Japan to be the second largest econ0my next year.

Curtis Mewbourne, managing director at PIMCO states that emerging markets, especially Brazil, Russia, China and India, known as the BRIC nations, have several factors in their favor:

  • In order for a nation to become and remain dominant, it must reduce its dependency on others. Mewbourne states that the BRICs all share characteristics that could potentially enable them do this.  These include low labor costs, large populations and low levels of consumer debt.
  • What makes these nations even more attractive is that global consumption growth in them is expected to grow exponentially.  A study by Credit Suisse indicates that by 2020, non-Japan Asia is expected to make up 32.3% of global consumption.
  • Emerging nations, especially China, are one of the largest holders of U.S. debt and indirectly control the value of the U.S. dollar – a powerful tool.

There’s an increasing number of ways for investors to grab exposure to emerging markets. You can invest by broad market, region or single country. Two examples are:

  • iShares MSCI Emerging Markets Index (EEM): up 46.4% year-to-date

  • Claymore/BNY Mellon BRIC (EEB): up 55.1% year-to-date

For more stories on emerging markets, visit our emerging markets category.

Kevin Grewal contributed to this article.

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.