That is a long way of saying that HILO’s country allocations are hampering the ETF. HILO devotes 21.1% of its weight to South Africa, a country beset by high unemployment, labor strife and surging bond yields. Next up on HILO’s roster is a 17% weight to Turkey. Said another way, HILO can work and work well when investors are favoring non-BRIC emerging markets, but right now, 38% of the ETF’s country weight is being rejected by investors. The combined 23.6% weight to China, Thailand and India is not helping HILO’s cause, either.
The fund dropped below its 200-day moving average last week and may not find support until it hits the lows of November 2012. A move to those levels followed by consolidation and an improved sentiment toward emerging markets equities could make HILO a buy, but that also means the ETF may have a bit more downside ahead of it.
EGShares Low Volatility Emerging Markets Dividend ETF
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of EEM.