ETF Talk: Emerging Markets Show Potential

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

Most emerging-market exchange-traded funds (ETFs) are broad-based investments in a universe defined largely by geography. This investment approach is fueled by economies that are driven increasingly by wealthy and better-educated populations in emerging markets. With emerging markets typically growing faster than developed ones, investors who lack the time to investigate and understand the unique properties of each such market can invest in broad, diversified emerging-market funds.

Emerging Global Advisors is an ETF provider that tries to research and find the best emerging markets to include in its funds. The company’s 17 ETF offerings, called EGShares, are aimed at letting investors use investment strategies for emerging markets that focus on core positions and developing market themes that are expected to offer the most potential. The provider uses indices that contain only developing market growth themes to exploit market trends, while excluding any holdings that the International Monetary Fund categorizes as developed. Emerging Global Advisors ETFs let you approach emerging markets with a less country-specific focus, in case you like diversification when investing in higher-risk and higher-reward opportunities.

Emerging Markets Dividend Growth (EMDG) is one of the provider’s funds. EMDG invests in 50 emerging-market companies with a high compounded annual dividend growth rate. It currently is most heavily invested in Brazil, Russia, Indonesia and China. The fund has gained 3.9% so far this year and it has issued three quarterly dividends since its inception in July 2013. Thus, it offers investors a bit of income, too.

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If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

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Sell in May and go away? That wasn’t good advice this year, especially if you were allocated to emerging markets and, in particular, India and Russia.

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