ETF Spotlight on iShares MSCI Emerging Markets (NYSEArca: EEM), part of an ongoing series.
Assets: $37.1 billion.
Objective: The iShares MSCI Emerging Markets fund tries to reflect the performance of the MSCI Emerging Markets Index, which is a cap-weighted index that tracks publicly traded securities in the emerging markets.
Holdings: Top holdings include: Samsung Electronics 3.1%, Gazprom 1.8%, China Mobile 1.7%, PetroBras 1.7% and Vale SA 1.4%.
What You Should Know:
- BlackRock’s iShares ETF division sponsors the fund.
- EEM has an expense ratio of 0.67%.
- The fund has 842 holdings and the top 10 components make up 16.1% of overall assets.
- Sector allocations include: financials 23.8%, energy 14.6%, materials 13.5%, information technology 12.9%, consumer staples 7.8%, telecommunication services 7.8%, consumer discretionary 7.7%, industrials 6.8%, utilities 3.6%, health care 1.1% and other 0.5%.
- Country allocations include: China 17.3%, Brazil 15.5%, South Korea 14.8%, Taiwan 10.4%, South Africa 7.6%, Russia 6.6%, India 6.5%, Mexico 4.6%, Malaysia 3.4%, Indonesia 2.8%.
- EEM has a 12-month yield of 2.1%.
- The fund is up 10.1% over the past month and up 4.1% over the last three months, but 6.3% lower over the last year. [Emerging Market ETFs Reemerging?]
- The ETF is 1.7% above its 200-day exponential moving average.
- “Many investors are attracted to emerging-markets equities, as they expect these countries’ higher GDP growth rates to drive strong equity returns,” according to Morningstar analyst Patricia Oey. “It appears this has been the case, with the MSCI Emerging Markets Index returning an annualized 15% over the past 10 years to Nov. 30, 2011, far outpacing the S&P 500’s 3%.”
- “Some of the issues that affected emerging markets included rising inflation and an anticipated slowdown in growth due to local tightening monetary policies and weaker export demand,” Oey added.
The Latest News:
- Analysts believe that a combination of positive economic trends, stronger growth and low valuations make emerging markets an opportunity buy, reports Marla Brill for Reuters.
- “After burning investors last year, we expect the BRIC countries (Brazil, Russia, India and China) to be among the top-performing markets in 2012,” Ned Davis Research analyst Anthony Welch, said in the Reuters article.. “We think this is a good time to add to exposure to those markets.”
- David Semple, Director of International Equity at Van Eck Global, notes that emerging market stocks are trading at less than 10 times forward earnings, compared to their historical range of 12 to 13 times earnings.
- “That’s not as cheap as the post-crisis periods of late 2008 and early 2009, but it’s quite attractive,” Semple said.
- “Emerging markets will remain the fuel for world growth, and secular themes such as population growth and an emerging middle class are truly powerful drivers,” Weyman Gong, chief investment strategist at Signature Financial Management, said.
iShares MSCI Emerging Markets
For past stories in this series, visit our ETF Spotlight category.
Max Chen contributed to this article.
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.