Emerging markets were bound to feel the economic effects of the coronavirus pandemic and now benchmark index provider MSCI is warning specifically Argentina and Turkey that they could be removed from the MSCI Emerging Markets Index due to lack of accessibility.
“While volatility increased dramatically due to the Covid-19 pandemic, global equity markets remained accessible and continued to function well, allowing issuers to raise capital and investors to manage risk during the crisis,” said Dimitris Melas, global head of equity research and chairman of the MSCI Index Policy Committee, in a statement per a CNBC report.
Traders could use the opportunity to buy-the-dip in these single-country ETFs, but face the possibility of catching a falling knife. Either way, here are a couple of options to consider:
- iShares MSCI Turkey ETF (NasdaqGM: TUR): TUR seeks to track the investment results of the MSCI Turkey IMI 25/50 Index. The fund generally will invest at least 90% of its assets in the component securities of the underlying index and in investments that have economic characteristics that are substantially identical to the component securities of the underlying index. The underlying index consists of stocks traded primarily on the Istanbul Stock Exchange (ISE).
- Global X MSCI Argentina ETF (NYSEArca: ARGT) : ARGT seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI All Argentina 25/50 Index. The fund invests at least 80% of its total assets in the securities of the underlying index and in American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”) based on the securities in the underlying index. The underlying index is designed to represent the performance of the broad Argentina equity universe while including a minimum number of constituents.
Another fund ton consider for broad-based emerging markets exposure, but with less risk is the
FlexShares Emerging Markets Quality Low Volatility Index Fund (QLVE). QLVE seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust Emerging Markets Quality Low Volatility IndexSM.
The underlying index is designed to reflect the performance of a selection of companies that, in aggregate, possess lower overall absolute volatility characteristics relative to a broad universe of securities domiciled in emerging market countries. Under normal circumstances, the fund will invest at least 80% of its total assets in the securities of the underlying index and in ADRs and GDRs based on the securities in the underlying index.
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