“You have to be prepared for, maybe, some longer-term volatility is that process with China plays out,” Bloom said. “But you can’t discount completely that we could get a deal, and people say, ‘Well look if you look at earnings, EM and China look cheap. Maybe I want to buy now.’ But there’s a risk that it gets cheaper.”
Consequently, Bloom advised investors to look at a low-vol emerging market screen to sift through the riskier plays in the developing economies and focus on those exhibit more stable performance. Specifically, the Invesco S&P Emerging Markets Low Volatility ETF (NYSEArca: EELV) is based on the S&P BMI Emerging Markets Low Volatility Index and consists of the 200 least volatile stocks of the S&P Emerging BMI Plus LargeMid Cap Index over the past 12 months.
“You can have some money at work in case we do get that sort of quick resolution, but if there is continued volatility and it drags on, you’ve got the downside protection,” Bloom added.
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