Emerging Market ETFs: Time for a New Approach | ETF Trends

Emerging market exchange traded funds (ETFs) have been moving past the plain vanilla, all-purpose type that seek to give general exposure. The new breed is getting more specialized, giving investors a chance to drill down into specific sectors.

There’s been a surge of new emerging market ETFs that give sector-specific pure plays, Jeff Benjamin for Investment News reports. The new indexes coming out now eschew the broad-market approach in favor of capitalizing on opportunities in sectors as they emerge. [Russia ETFs: An Emerging Illusion?]

While this approach is more aggressive and requires more due diligence on the underlying market drivers, the diversification benefits are outstanding. But be aware that while you may be getting more concentrated exposure and flexibility, the tradeoff is increased volatility and risk. [5 Reasons to Consider Brazil ETFs.]

If you’re salivating at the thought of emerging market exposure, but are wary of the risks, consider implementing a simple strategy with a stop-loss. One we suggest is the 200-day moving average with an 8% trailing stop loss. [How to Use a Trend Following Strategy.]

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

  • Emerging Global Shares Dow Jones Emerging Markets Energy Titans (NYSEArca: EEO)

  • Market Vectors Brazil Small Cap (NYSEArca: BRF)

Other newer sector-based funds include:

  • Claymore/AlphaShares China Technology (NYSEArca: CQQQ)
  • Global X China Consumer Fund (NYSEArca:CHIQ)
  • Emerging Global Shares INDXX China Infrastructure Index Fund (NYSEArca: CHXX)

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.