Hougan: Three ETFs For Contrarians

August 24, 2015

Contrarian Pick No. 2: Market Vectors Gold Miners ETF (GDX | C-76)

Watching the Market Vectors Gold Miners ETF over the past few years has been an exercise in pain. The fund is down more than 75 percent from its highs in 2011, as collapsing gold prices and continued mismanagement in the gold mining patch have sent prices falling.

But my inbox has been filling up with people poking around at the gold miners. With energy prices down and gold prices (maybe) turning the corner, people see upside in this broken-down name.

The fund had a great August, rising 9.5 percent even as the markets tumbled. Investors have plowed about $120 million in net new money into the fund in the past week. If gold stabilizes, GDX could do well.

Contrarian Pick No. 3: EMQQ Emerging Markets Internet & Ecommerce (EMQQ | F-21)

In general, I’ve been hearing chatter from my bottom-fishing friends about finding opportunities in emerging markets. With broad-based emerging markets down 22 percent this year—and emerging markets now trailing the S&P 500 over the past 11 years—people think there must be opportunity.

EMQQ founder Kevin Carter stopped by the ETF.com headquarters in San Francisco last week and laid out a strong case for his nascent fund. While the fund has fallen in lock step with emerging markets in the past few days, it continues to hold a portfolio of stocks with amazing growth stories: Alibaba, Tencent, Baidu and firms like 58.com, the so-called Craigslist of China.

The P/E of the fund is still high—31 at last reading—but its companies are growing fast and already making real money. As something to buy and hold for 10 years in a satellite position, it could be interesting.

Conclusion

I’m not nearly bold enough to own these funds. I like broad-based asset allocation in my own portfolio, holding a diversified basket of low-cost ETFs and rebalancing occasionally.

But for those looking for satellite opportunities, these are among the ETFs I hear smart folks talking about. They’re at least worth considering.


Contact Matt Hougan at [email protected].

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