Emerging markets exchange-traded funds have no doubt made a comeback in 2019 with headliner funds in the space like the iShares MSCI Emerging Markets ETF (NYSEArca: EEM) up over 12 percent. This renewed performance in the green comes after a rough 2018 for all EM equities that saw losses due to interest rate hikes, a strong dollar and a U.S.-China trade war.
Tailwinds for emerging markets could lie ahead as the U.S. dollar begins to reverse from its initial strength in 2018. “Patience” has been a constant buzzword in Federal Reserve lexicon as of late with regard to interest rate hikes.
Per a Nasdaq Dorsey Wright monthly update, the “recent movement of the dollar provides tailwinds for some areas of the market that were, for most of 2018, fighting stiff headwinds. In particular, international equities is one area of the global markets that tends to perform better when the dollar is weakening.”
The Nasdaq Dorsey Wright update also notes that “the trend chart of EEM has returned to a positive trend and has seen a surge in its technical fund score, which currently sits at an impressive 4.30 (out of a possible 6). All in all, the technical outlook for EEM, and emerging markets in general, has taken a turn for the better as we kick off 2019, while the US equity market has similarly regained solid footing.
Related: An Alternative to The Basic China ETF
Furthermore, EM equities are still relative bargains compared to the U.S. counterparts. Of course, it’s difficult to mention EM without mentioning the biggest country in the space: China.
A mix of Chinese stimulus measures have been providing the fodder for economic growth, such as lower taxes, no corporate tax breaks, monetary policy adjustments, and more market access for foreign companies to set up shop. All in all, Wall Street is looking at the Chinese government’s latest efforts as a plus for its economy, which makes it rife for investment.
In fact, China is becoming less resistant to safeguarding its businesses, which will open the pathways to more foreign investment.
Of course, Chinese equities will no doubt benefit the primary trigger event of a U.S.-China trade deal that’s still undergoing negotiations. While some analysts feel a trade deal is already priced into the U.S.capital markets, investors are hoping it could provide a surge for Chinese equities even further.
For ETF investors interested in getting into China ETFs, they might want to look at the best-performing funds thus far in 2019. Here are the top 10 performers YTD as of April 29, 2019 via ETFdb.com:
| Symbol | ETF Name | Total Assets* | YTD |
| CHIK | Global X MSCI China Information Technology ETF | $1,891.60 | 36.12% |
| CNXT | VanEck Vectors ChinaAMC SME-ChiNext ETF | $35,206.70 | 33.90% |
| AFTY | CSOP FTSE China A50 ETF | $11,343.48 | 33.56% |
| ASHR | Xtrackers Harvest CSI 300 China A-Shares Fund | $2,317,299.51 | 32.60% |
| ASHS | Xtrackers Harvest CSI 500 China-A Shares Small Cap Fund | $83,472.71 | 32.56% |
| PGJ | Invesco Golden Dragon China ETF | $214,770.19 | 32.47% |
| XINA | SPDR MSCI China A Shares IMI ETF | $5,444.39 | 32.40% |
| CHIS | Global X MSCI Consumer Staples ETF | $1,928.87 | 32.36% |
| PEK | VanEck Vectors ChinaAMC CSI 300 ETF | $91,692.33 | 32.19% |
| CHIQ | Global X MSCI China Consumer Discretionary ETF | $166,069.31 | 31.92% |
* Assets and Average Volume as of 2019-04-26 20:15 UTC
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