Some of them, like Taiwan, South Korea and Singapore are industrial powerhouses while others like the Philippines, Malaysia and Indonesia enjoy excellent demographics and natural resources.
Compared to more established markets, these markets display more volatility (higher beta). When global markets witness bull-runs, these markets outperform. Conversely, when markets slide, these markets underperform and witness steeper declines.
Malaysia, Indonesia, the Philippines and Vietnam are rich in natural resources and stand to benefit from a growing China. They also have a young population that can generate huge internal demand and can decouple from global markets in times of heightened volatility.
5) Van Eck Vietnam ETF (VNM)
This fund tracks the Market Vector Vietnam Index which includes companies either domiciled in Vietnam or that earns at least 50 percent revenues from the domestic market.
YTD return has been 35.81 percent while annual dividend yield was 1.95 percent as of late March. Launched in August 2009, VNM has an expense ratio of 0.76 percent. One year return was -16.80 percent.
It’s important to note that the economy is still heavily state controlled and inflation and currency devaluation has impacted equity performance severely. Major holdings include banking stocks, oil and gas, fertilizer and petrochemical companies etc.
4) iShares Philippines ETF (EPHE)
This fund tracks the proprietary MSCI Philippines Investable Market Index, which covers the country’s broad equity market.
Launched in September 2010, EPHE manages $114million in assets and has an expense ratio of 0.65 percent. YTD return was 19.43 percent and annual return has been 26.14 percent.
Top holdings include long-distance telecom operators, financial companies, real estate and utilities.
3) iShares Singapore ETF (EWS)
This fund tracks the MSCI Singapore Index covering equities listed in Singapore. Singapore is the economic and financial nerve center for most of Southeast Asia and has one of busiest sea-ports in the world. The product has an expense ratio of 0.53 percent and assets under management equal $1.6 billion as of late march.
YTD return has been 17.73 percent while annual dividend yield is estimated at 3.68 percent. One year return was -1 percent. Top holdings include telecom, banking, commodities and airline stocks.
2) iShares Taiwan ETF (EWT)
Launched in June 2000, EWT tracks the proprietary MSCI Taiwan Index which follows the Taiwanese equity market. The fund manages $2.5 billion in assets and has an expense ratio of 0.71 percent.
YTD return was 14.43 percent and dividend yield was 3.52 percent as of late march. The one year return was -3.94. Taiwan manufactures a host of components for Apple computers and semiconductors are the major market drivers. Top holdings include semiconductor, technology, smartphone manufacturers and telecom equipment manufacturers.
1) iShares Malaysia ETF (EWM)
This ETF tracks the MSCI Malaysia Index which in turn follows the country’s equity market.
Launched in March 1996, EWM has an expense ratio of 0.53 percent and AUM equals $937 million. YTD return was 8.06 percent and annual dividend yield was 4.13 percent as of late March.
Malaysia has a young population and is a major supplier of palm oil and rubber. Top holdings include banking and financial services, conglomerates with interests in plantation, energy, real estate, automobile and industrial equipments, Oil and petrochemicals, mobile network operator etc.
From a momentum point of view, all five contenders are in upward trend and positioned above their respective long-term trend lines. Nevertheless, trend changes can happen in a today’s volatile market environment, which is why I recommend the use of a trailing sell stop.
For country ETFs such as these, I recommend an exit point based on a 10% drop from the high price since you established the position.
Disclosure: No holdingsContact Ulli