As investors begin to reconsider the beaten-down developing economies, Deutsche Asset Management has launched a new smart-beta emerging market exchange traded fund with a quality tilt.
Robert Bush, Investment Strategist at Deutsche Bank, told ETF Trends that the emerging markets have been stabilizing and investors are beginning to funnel money back into the asset category.
“Check your emerging market allocations and be sure you’re not avoiding this long-term opportunity,” Bush said.
The emerging markets have been underperforming the U.S. markets for years and now trade at a 30% discount to U.S. equities, the lowest its ever been, Bush noted.
The benchmark MSCI Emerging Market Index currently shows a 11.17 price-to-earnings and a 1.17 price-to-book, according to Morningstar data. In contrast, the S&P 500 is showing a 17.22 P/E and a 2.34 P/B.
As a way to capture the emerging market growth opportunity, Deutsche Asset Management launched the Deutsche X-trackers FTSE Emerging Comprehensive Factor ETF (NYSEArca: DEMG). DEMG has a 0.50% expense ratio.
DEMG tries to reflect the performance of the FTSE Emerging Comprehensive Factor Index, which provides exposure to emerging market equities based on five factors, including quality, value, momentum, low volatility and size.