Looking for profitable opportunities within emerging markets (EM) could be like finding a needle in the haystack for the novice investor looking for diversification overseas. However, one area that could provide a potential winner is the country of Indonesia, which could be poised for a rebound following the coronavirus pandemic.
“The economy of G-20 member Indonesia has huge potency to recover from the impacts of the ongoing COVID-19 pandemic, Asian Infrastructure Investment Bank’s (AIIB’s) Vice President and Chief Administration Officer, Luky Eko Wuryanto, stated,” an Antara News article reported. “Indonesia is not the only nation to be reeling from the unprecedented pressure since nearly all countries worldwide are also facing a similar situation, elicited by the novel coronavirus disease pandemic, he noted in a statement in Jakarta on Wednesday.”
“Wuryanto pointed out that Indonesia, emerging as the 16th-largest economy in the world, which was instrumental in it being honored to be a member of G-20, was one of its strengths,” the article added.
Getting Indonesia Exposure via ETFs
Exchange-traded fund (ETF) investors sensing an opportunity can look at the VanEck Vectors Indonesia Index ETF (IDX). IDX seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVISÂ® Indonesia Index.
The fund normally invests at least 80% of its total assets in securities that comprise the fund’s benchmark index. The index includes securities of Indonesian companies. A company is generally considered to be an Indonesian company if it is incorporated in Indonesia or is incorporated outside of Indonesia but has at least 50% of its revenues/related assets in Indonesia. Such companies may include small- and medium-capitalization companies.
In the meantime, the economic doldrums in Indonesia have been reflected in corresponding ETFs, such as the iShares MSCI Indonesia ETF (EIDO). EIDO seeks to track the investment results of the MSCI Indonesia 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 index is designed to measure the performance of the large-, mid- and small-capitalization segments of the Indonesian equity market.
Investors who want broad exposure to EM can look at funds like the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO). VWO employs an indexing investment approach designed to track the performance of the FTSE Emerging Markets All Cap China A Inclusion Index. It invests by sampling the index, meaning that it holds a broadly diversified collection of securities that, in the aggregate, approximates the index in terms of key characteristics.
For more market trends, visit ETF Trends.