Smaller Emerging Markets ETF Hot New Trend

October 16, 2014

2014—A Breakthrough Year

2014 has been a breakthrough year for these innovative emerging market ETFs, as well as frontier markets.

Investors may have begun questioning the “emerging” status of countries like the BRICs, South Korea and Taiwan, compared with a decade ago. It’s only a natural progression that emerging markets eventually grow into developed markets.

Other investors may be front-running the lengthy process of country upgrades according to the strict methodologies of major index providers.

Or, investors may just be searching for new markets with less “co-movement” to broad U.S. and emerging market indexes. For example, BBRC has an R-squared of only 0.66 to the MSCI Emerging Markets IMI Index, suggesting low “goodness of fit.”

BBRC Stats


EMFM’s R-squared is even lower—0.64—to this same MSCI benchmark, again suggesting little co-movement here.

EMFM Stats


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