Puts continue to trade actively in EEM (iShares MSCI Emerging Markets,Expense Ratio 0.67%%), which has been a recurring theme this week and related ETF VWO (Vanguard Emerging Markets, Expense Ratio 0.18%) saw similar flows in the past week.
The EM space has been extraordinarily volatile, largely on movements in the Chinese equity market, and EEM this morning has opened on a gap lower to trade at its lowest levels since late April.
EEM has had a hard time as has VWO in terms of asset flows this week as well, both bleeding more than $1.7 billion collectively.
We have spent considerable time this week, and on several occasions thus far in 2013 speaking about the notable relative underperformance of broad based Emerging Markets index products like EEM and VWO when compared to say the U.S. Large Cap equity market (S&P 500) or the MSCI EAFE from trailing one year, and YTD standpoints.
The put buyers aggressively present in both EEM and VWO seem to have been directionally “right” in the short term.
Despite the swoon in prices in emerging markets equities, one niche ETF that falls within the broader EM category recently crossed the $1 billion mark in terms of assets under management.
ECON (EGShares DJ Emerging Markets Consumer Titans, Expense Ratio 0.85%) debuted in September of 2010 and focuses on the Consumer Goods and Consumer Services sectors in the EM space, with exposure to Latin America (notably Mexico and Brazil) as well as South Africa, India, Chile, Malaysia, China, and others.
What is notable here in terms of portfolio composition when compared to broader EM proxies, is the relative underweighting to China (5.90% of the portfolio) where China is the top single country weighting in the MSCI EM Index at 18.67%.
ECON holds thirty individual equities and now averages nearly 300,000 shares traded on an average daily basis.
The portfolio has a mega/large cap slant, with names such as Ambev, Naspers Ltd, Fomento Economico Mexicano SAB de CV, and Wal-Mart de Mexico making up the top weightings in the underlying index.
ECON is now the third largest ETF in terms of assets under management in the broader Consumer Staples Equity category, and other ETFs with an international focus here that should be compared to ECON include KXI (iShares S&P Global Consumer Staples, Expense Ratio 0.48%), IPS (SPDR S&P International Consumer Staples, Expense Ratio 0.50%), BRAQ (Global X Brazil Consumer, Expense Ratio 0.77%), AXSL (iShares MSCI ACWI ex-U.S. Consumer Staples Sector, Expense Ratio 0.48%), and GGEM (EGShares Consumer Goods GEMS, Expense Ratio 0.85%).
For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.
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