Emerging market ETFs are hanging in much better than the S&P 500 since the pullback that began in September thanks in part to surprising strength in Chinese stocks.
For the month ended Nov. 7, iShares MSCI Emerging Markets (NYSEArca: EEM) was down 1.2% compared with a loss of 4.4% for SPDR S&P 500 (NYSEArca: SPY), according to Morningstar.
For the trailing three months, the emerging market ETF is up about 3% while the S&P 500 fund is flat. China is the largest single country in EEM at about 18% of the portfolio.
China is helping buoy the developing market ETF. For example, iShares FTSE China 25 (NYSEArca: FXI) is up more than 5% the past four weeks. Since the end of September, the China fund has pulled in more than $1 billion and is the third best-selling ETF, according to IndexUniverse data. [BRIC ETFs: Investors Jump Into China and Brazil]
Meanwhile, Guggenheim China Small Cap (NYSEArca: HAO) is the second-best performing ETF for the trailing month. [ETF Spotlight: Chinese Small-Caps]
FXI soared to a six-month high this week as better-than-expected corporate earnings bolstered the outlook for Asia’s largest economy, Bloomberg News reports. “The positive earnings season is helping Chinese U.S.-traded stocks to their fourth straight month of gains, with data from manufacturing to retail sales bolstering China’s outlook after the economy’s seven-quarter slowdown,” it said.
“China has been a relative laggard compared with the broader emerging markets indices for much of 2012, but the country’s equity market has all of a sudden caught a bid in recent weeks and is making a significant move,” says Paul Weisbruch at Street One Financial. [ETF Chart of the Day: China]