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Just Another BRIC ETF in the Wall
Courtesy of Daniel Sckolnik of ETF Periscope
“A man who carries a cat by the tail learns something he can learn in no other way.” ~ Mark Twain
This week the equity markets were less Bull and Bear and more Boar.
As in Boring.
That isn’t to say there was nothing much going on. The markets continued to trend upward, if ever so slightly. Initial earnings reports, in general, are not causing significant shockwaves to the reporting entities, meaning that they are generally falling within the range of expectations. Gold finally paused to exhale, posting its first weekly decline in six weeks, but giving no real indication that it’s ready for a full-blown correction. December Crude Oil contract prices were somewhat volatile intra-week, but ended Friday about where they began on Monday.
If there was a single reason for what might be regarded as hesitation on the markets’ behalf, it might be attributed to the fact that the G-20 meeting was still in progress, and though little of import was expected to emerge, investors wanted to see if the conclusion of the meetings on Saturday would reveal any true surprises. It could also have contributed to the markets’ low volume on Friday.
So where does this leave the thoughtful ETF investor and/or trader? Is the uptrend still intact enough to warrant some new Bullish additions to your virtual portfolio? And if the answer to that question is affirmative, what might some ETF plays be that are worth considering?
How about taking a look at some of the emerging markets that are out there? Yes, it just may be a good time to take a closer look at some of the more “established” emerging markets, nothing too exotic. How about reassessing the gang of four, known by the acronym BRIC?
Most investors know that BRIC stands for Brazil, Russia, India and China, and that this group of countries has offered more than their fair share of profitable opportunities over the years. But, as they say in Hollywood, “What have you done for me lately?” Let’s take a look.
It is probably of value to realize that these countries haven’t formed any sort of formal alliances, and that the acronym pretty much can be regarded as the product of smart marketing in terms of representing a particular investment opportunity. They are markedly different countries with markedly different economies, with some, such as Brazil and Russia, enjoying a greater abundance of natural resources than others. Analyzing the fundamentals of these countries is beyond the scope of this commentary, but there’s nothing wrong with looking at the shorthand as seen on the scorecard.
In other words, how have they performed this year in relationship to the U.S. equity markets?
For the purpose of this illustration, I’ve chosen four ETFs: RSX for Russia, EPI for India, EWZ for Brazil and FXI for China. In addition, BKF is offered up as a fifth choice to play all four countries via a single ETF.
RSX (Market Vectors TR Russia ETF), which tracks DAXglobal Russia+ Index, gives investors exposure to publicly traded companies based within Russia and traded either in Russia or on a leading global exchange. For the year-to-date, RSX is up around 10%. That compares favorably to the S&P 500 Index, which is up around 5% so far this year. A look at RSX’s chart shows that recently the 30-day moving average crossed above its 200-day MA, generally regarded as a bullish indicator. It is currently 10% off this year’s high.
EPI (WisdomTree India Earnings Fund ETF) tracks the WisdomTree Earnings Index, a fundamentally weighted index that measures the performance of companies incorporated and traded in India that are profitable and that are eligible to be purchased by foreign investors. So far this year, EPI is up close to 24%. It broke above its high for the year in September, and has yet to look back anywhere but up.
EWZ (iShares MSCI Brazil Index Fund ETF) tracks the MSCI Brazil Index, which measures the performance of the Brazilian equity market. EWZ is not nearly as impressive, as it is at the breakeven mark YTD.
FXI (iShares FTSE/Xinhua China 25 Index Fund ETF) tracks the FTSE/Xinhua China 25 Index, which measures the performance of the largest companies in the China equity market. It finds itself up over 8% on the year, about 5% above its earlier year highs. A look at the chart shows another 30-day MA over 200-day MA cross.
BKF (iShares MSCI BRIC Index Fund ETF) tracks the MSCI BRIC Index, which measures the combined equity market performance in Brazil, Russia, Portugal and China. It is up over 7% for the year, and chartwise, not only is it hovering above its earlier high this year, it too has quite recently posted a 30-day MA over 200-day MA cross.
So how do these BRICs stack up compared to the S&P 500 Index? With the notable exception of Brazil, they all do fairly well. Well enough to inspire you to add them to your virtual portfolio? Depends on the potential value you see in adding emerging markets to the mix. You might decide to simply add an ETF like BKF to your virtual portfolio, or perhaps to try something a bit more in the “absolute return” vein. In that case, you could buy the stronger of the quintet, EPI and RSX, and short the weaker two, FXI and EWZ.
It’s also worth noting that the above ETFs are merely a few of the choices available to you if you want to play the BRIC market. There’s an ever-growing universe of ETFs that track this segment of the emerging markets category, so jump on the net, do some digging, and figure where in the world you might want to go and play.
ETF Periscope
Full disclosure: The author does not personally hold any of the ETFs mentioned in this week’s “What the Periscope Sees.”
Disclaimer: This newsletter is published solely for informational purposes and is not to be construed as advice or a recommendation to specific individuals. Individuals should take into account their personal financial circumstances in acting on any rankings or stock selections provided by Sabrient. Sabrient makes no representations that the techniques used in its rankings or selections will result in or guarantee profits in trading. Trading involves risk, including possible loss of principal and other losses, and past performance is no indication of future results.
“A man who carries a cat by the tail learns something he can learn in no other way.” ~ Mark Twain
This week the equity markets were less Bull and Bear and more Boar.
As in Boring.
That isn’t to say there was nothing much going on. The markets continued to trend upward, if ever so slightly. Initial earnings reports, in general, are not causing significant shockwaves to the reporting entities, meaning that they are generally falling within the range of expectations. Gold finally paused to exhale, posting its first weekly decline in six weeks, but giving no real indication that it’s ready for a full-blown correction. December Crude Oil contract prices were somewhat volatile intra-week, but ended Friday about where they began on Monday.
If there was a single reason for what might be regarded as hesitation on the markets’ behalf, it might be attributed to the fact that the G-20 meeting was still in progress, and though little of import was expected to emerge, investors wanted to see if the conclusion of the meetings on Saturday would reveal any true surprises. It could also have contributed to the markets’ low volume on Friday.
So where does this leave the thoughtful ETF investor and/or trader? Is the uptrend still intact enough to warrant some new Bullish additions to your virtual portfolio? And if the answer to that question is affirmative, what might some ETF plays be that are worth considering?
How about taking a look at some of the emerging markets that are out there? Yes, it just may be a good time to take a closer look at some of the more “established” emerging markets, nothing too exotic. How about reassessing the gang of four, known by the acronym BRIC?
Most investors know that BRIC stands for Brazil, Russia, India and China, and that this group of countries has offered more than their fair share of profitable opportunities over the years. But, as they say in Hollywood, “What have you done for me lately?” Let’s take a look.
It is probably of value to realize that these countries haven’t formed any sort of formal alliances, and that the acronym pretty much can be regarded as the product of smart marketing in terms of representing a particular investment opportunity. They are markedly different countries with markedly different economies, with some, such as Brazil and Russia, enjoying a greater abundance of natural resources than others. Analyzing the fundamentals of these countries is beyond the scope of this commentary, but there’s nothing wrong with looking at the shorthand as seen on the scorecard.
In other words, how have they performed this year in relationship to the U.S. equity markets?
For the purpose of this illustration, I’ve chosen four ETFs: RSX for Russia, EPI for India, EWZ for Brazil and FXI for China. In addition, BKF is offered up as a fifth choice to play all four countries via a single ETF.
RSX (Market Vectors TR Russia ETF), which tracks DAXglobal Russia+ Index, gives investors exposure to publicly traded companies based within Russia and traded either in Russia or on a leading global exchange. For the year-to-date, RSX is up around 10%. That compares favorably to the S&P 500 Index, which is up around 5% so far this year. A look at RSX’s chart shows that recently the 30-day moving average crossed above its 200-day MA, generally regarded as a bullish indicator. It is currently 10% off this year’s high.
EPI (WisdomTree India Earnings Fund ETF) tracks the WisdomTree Earnings Index, a fundamentally weighted index that measures the performance of companies incorporated and traded in India that are profitable and that are eligible to be purchased by foreign investors. So far this year, EPI is up close to 24%. It broke above its high for the year in September, and has yet to look back anywhere but up.
EWZ (iShares MSCI Brazil Index Fund ETF) tracks the MSCI Brazil Index, which measures the performance of the Brazilian equity market. EWZ is not nearly as impressive, as it is at the breakeven mark YTD.
FXI (iShares FTSE/Xinhua China 25 Index Fund ETF) tracks the FTSE/Xinhua China 25 Index, which measures the performance of the largest companies in the China equity market. It finds itself up over 8% on the year, about 5% above its earlier year highs. A look at the chart shows another 30-day MA over 200-day MA cross.
BKF (iShares MSCI BRIC Index Fund ETF) tracks the MSCI BRIC Index, which measures the combined equity market performance in Brazil, Russia, Portugal and China. It is up over 7% for the year, and chartwise, not only is it hovering above its earlier high this year, it too has quite recently posted a 30-day MA over 200-day MA cross.
So how do these BRICs stack up compared to the S&P 500 Index? With the notable exception of Brazil, they all do fairly well. Well enough to inspire you to add them to your virtual portfolio? Depends on the potential value you see in adding emerging markets to the mix. You might decide to simply add an ETF like BKF to your virtual portfolio, or perhaps to try something a bit more in the “absolute return” vein. In that case, you could buy the stronger of the quintet, EPI and RSX, and short the weaker two, FXI and EWZ.
It’s also worth noting that the above ETFs are merely a few of the choices available to you if you want to play the BRIC market. There’s an ever-growing universe of ETFs that track this segment of the emerging markets category, so jump on the net, do some digging, and figure where in the world you might want to go and play.
ETF Periscope
Full disclosure: The author does not personally hold any of the ETFs mentioned in this week’s “What the Periscope Sees.”
Disclaimer: This newsletter is published solely for informational purposes and is not to be construed as advice or a recommendation to specific individuals. Individuals should take into account their personal financial circumstances in acting on any rankings or stock selections provided by Sabrient. Sabrient makes no representations that the techniques used in its rankings or selections will result in or guarantee profits in trading. Trading involves risk, including possible loss of principal and other losses, and past performance is no indication of future results.
