“While higher rates have sunk most emerging-markets investments this year, history suggests 34% of emerging-markets ETFs should have a positive reaction to a rising yield curve, and that includes bond ETFs,” Barron’s reported, citing Ned Davis.
Emerging markets stocks as a play on rising U.S. interest rates may not be the first trade investors think when tapering arrives, but there is evidence to suggest it has been working. BKF, the iShares BRIC fund, is up 5.2% in the past three months. Benefiting from compelling valuations, among other factors, the iShares China Large Cap-ETF (NYSEArca: FXI) has climbed 12.4% since June 14.
iShares MSCI BRIC ETF
ETF Trends editorial team contributed to this post.