Emerging markets have had a turbulent year but a number of exchange traded funds, especially those with exposure to technology companies are up as much as 18% year to date.
As of June 20, 2019, the 5 best-performing emerging markets ETFs year to date are:
1. Emerging Markets Internet & Commerce ETF (EMQQ) 18.94% YTD
The Emerging Markets Internet & Commerce ETF (EMQQ) follows the EMQQ Index which offers investors exposure to growth of online consumption in countries such as India, China, Brazil, Turkey and others. “To be included, the companies must derive their profits from e-commerce or internet activities and include search engines, online retail, social networking, online video, e-payments, online gaming and online travel,” according to the fund’s fact sheet. The fund has an expense ratio of 0.86%.
2. KraneShares Emerging Markets Consumer Technology ETF (KEMQ) 16.52% YTD
Another emerging market ETF that hones in on the technology space, the KraneShares Emerging Markets Consumer Technology ETF (KEMQ) tracks the Solactive Emerging Markets Consumer Technology Index. “The Index selects companies from 26 eligible countries within emerging markets whose primary business or businesses are internet retail, internet software/services, purchase, payment processing, or software for internet and E-Commerce transactions,” according to the fund’s fact sheet. The fund has a total annual fund operating expense of 0.79% (net).
3. First Trust ISE Chindia Index Fund (FNI) 14.60% YTD
The First Trust ISE Chindia Index Fund (FNI) follows the ISE ChIndia Index, a modified market cap-weighted index designed to track the performance of U.S.-listed securities issued by small, mid and large cap companies based in China or India. Qualified securities are then sorted and ranked to provide a composite score. The fund has a net expense ratio of 0.60%.
4. Invesco BRIC ETF (EEB) 14.30% YTD
The Invesco BRIC ETF (EEB) follows the S&P/BNY Mellon BRIC Select DR Index. “The Index is comprised of ADRs, GDRs and China H-Shares of Chinese equities, based on liquidity, from all depositary receipts of companies from four major emerging markets and China H-shares incorporated in mainland China and listed on the Hong Kong Stock Exchange,” according to the fund’s fact sheet. “The index is computed using the net return, which withholds applicable taxes for non-resident investors.” EEB has a total expense ratio of 0.73%.
5. Cambria Emerging Shareholder Yield ETF (EYLD) 12.67% YTD
The Cambria Emerging Shareholder Yield ETF (EYLD) follows the Cambria Emerging Shareholder Yield Index. The index includes stocks with high cash distribution characteristics. Stock included in the index must be from emerging markets with market capitalizations over US $200 million. “The Index is comprised of the 100 companies with the best combined rank of dividend payments and net stock buybacks, which are the key components of shareholder yield,” according to the fund’s fact sheet. “The Index also screens for value and quality factors, and for companies that demonstrate low financial leverage.” The fund’s expense ratio is 0.65%.
Looking out into 2019, a Relative Weight Spotlight from Direxion Investments stated, “EM’s discount to developed markets has been relatively attractive. At the same time, earnings expectations have improved and actually look favorable for EM.”
The spotlight noted, however, “ … if the Federal Reserve feels that the data to raise rates faster than expected, EM would suffer. Overall, if some of the concerns, such as trade or idiosyncratic issues do not come to fruition, investors may jump into EM equities, especially with the attractive relative valuations.”
For more investment strategies, visit our Emerging Markets Category.