EMBB offers insurance and opportunity on another front: Robust exposure to emerging markets with current account surpluses, or in the case of Indonesia (7.2% of the ETF’s weight), narrowing deficits. Taiwan, South Korea, Malaysia, Thailand and the Philippines are all account surplus nations and combine for over 47% of EMBB’s weight, according to State Street data.
South Africa and Indonesia, a combined 22.4% of EMBB’s weight, have seen their account deficits narrow in recent months.[How to Bet on Asia in 2014]
“With emerging markets being broadly sold off this year, especially BRIC ETFs, now may be the time for savvy investors to consider ways of adding exposure to the long-run growth of emerging markets, but in more sophisticated ways. In fact, EMBB can be considered a core building block for future EM allocations as it includes all of the countries within the MSCI EM Index except for the four BRIC markets,” said Maza.
In the past month, four of the single-country ETFs tracking EMBB’s top six country weights have traded higher. The ETF charges 0.55% per year.
SPDR MSCI EM Beyond BRIC ETF
Tom Lydon’s clients own shares of EEM.