A Smart Beta EM ETF Struts Its Stuff Thanks to Trump

Emerging markets exchange traded funds are shaking off some of the lethargy caused by investors’ knee-jerk reactions to Donald Trump’s surprise victory in the November U.S. presidential election. In fact, some emerging markets ETFs have recently been printing new highs.

That includes the Schwab Fundamental Emerging Markets Large Company ETF (NYSEArca: FNDE). FNDE is rapidly becoming one of the dominant names among smart beta emerging markets ETFs, an asset class usually dominated by plain vanilla cap-weighted funds.

FNDE tracks the Russell Fundamental Emerging Markets large Company Index, which selects, ranks and weights components based on fundamental factors like adjusted sales, retained operating cash flow and dividends plus buybacks.

“FNDE has now gained 56.26% from its 52-week low, which was hit back on January 25, 2016. The fund has now returned 8.76% over the past month, 5.89% over the past three months, and 14.61% in the past six months. Those returns compare very favorably to the benchmark S&P 500 index’s 0.19%, 6.43%, and 5.47% returns in the same periods, respectively. It’s becoming clear that Emerging Markets Equities — especially large cap names — are outperforming their U.S. counterparts,” according to ETF Daily News.

Five countries – Brazil, South Korea, Russia, China and Taiwan – have double-digit allocations in FNDE. With those large weights to Brazil and Russia along with an almost 26% weight to the energy sector, its largest sector weight, FNDE does feature exposure to oil prices. Financial services, technology and materials names combine for about half of FNDE’s weight.