Emerging Market ETF Ideas

Written by GSCR Staff   
Tuesday, 21 May 2013 08:59

Many ETF buyers use the vehicles to invest in or leverage against specific sectors. ETFs can also represent emerging market nations, which, while carrying greater risk than U.S. equities, can also offer big rewards.  

For example, a common acronym used in a financial and geo-political aspect is BRIC.  BRIC is the acronym for Brazil, Russia, India, and China, representing some of the largest economies in the world.  While lumping all of these countries all together as one common entity is a vast overreach for simplicity, investing in ETFs that are representative of these regions can be a fruitful way of gaining broad exposure in one fell swoop.

There are a bevy of choices out there in the ETF universe.  Below are a few possibilities in emerging markets with our small cap mentality in mind, i.e. maximum current prices close to the $20 target or lower.  We note that these suggested vehicles address a longer term perspective for the most part, of at least a year, and not necessarily a trading idea for a quick profit.

Brazil (BRXX –$20.63 – EGShares Brazil Infrastructure):

This one has been downtrodden a little since the start of the year, so it may be time to buy ‘cheap’.  With two huge international events coming up, the FIFA World Cup in 2014, and 2016 Summer Olympic Games, the country is pouring money into infrastructure. 

Russia (RSXJ - $14.18 – Market Vectors Russia Small Cap):

Russia is by far the worst performing BRIC or BRIC plus one nation.  RSXJ has endured a serious sell-off recently as Russia is entering a recession coupled with inflation.  The ETF price is right, but this maybe a long shot and more of a long term play.

India (SCIN –$13.53 - EGShares India Small Cap):

This ETF looks very good from a technical perspective for short, intermediate, and long term.  India themed funds took a small hit earlier this year, but are starting to rebound.

China (VNM - $20.77 – Market Vectors Vietnam):

OK, so we cheated a little here.  Consider this a high risk, high reward ETF as the Vietnamese stock market is relatively volatile.  However, the opportunity for growth is phenomenal and the government continues to ‘imitate’ China from with its embrace of capitalism but is about 20 behind.

 

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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