Best & Worst Performing Emerging Market ETFs

June 10, 2019

It’s been a wild ride for emerging markets (EM) this year. After starting 2019 with a bang, the world’s largest EM fund, the $61.6 billion Vanguard FTSE Emerging Markets ETF (VWO), was suddenly caught reeling.

VWO’s stellar year-to-date gain of 15.7% in April turned into a much more modest 4.6% gain in May, before rebounding slightly to 6.7% currently.

The rival iShares Core MSCI Emerging Markets ETF (IEMG), with $56.8 billion in assets, followed a similar path this year—a hot start followed by a recent retrenchment.

 

YTD Returns For VWO, IEMG

 

Emerging markets, of course, haven’t been immune from the worries that have rattled global markets during the past several weeks. The U.S.-China trade war remains front and center in investors’ minds. Add on top of that fresh concerns about the U.S.-Mexico trade relationship, and you have a recipe for fear, uncertainty and doubt, which gives investors pause.

It doesn’t help that China and Mexico are both EMs; understandably, that fact has dampened appetite for the asset class. Yet when you break down this year’s EM returns, you get some surprising results.

China ETFs Surprise

Perhaps the biggest surprise is that, despite being ground zero for the most consequential trade war in decades, Chinese stocks are actually doing quite well this year.

In fact, eight of the top 10 best-performing EM ETFs are China funds. That includes the Global X MSCI China Consumer Staples ETF (CHIS), up 26.92%; the CSOP FTSE China A50 ETF (AFTY), up 23.8%; and the KraneShares CICC China Leaders 100 Index ETF (KFYP), up 20%.

 

Best Performing EM ETFs Of 2019 (ex. leveraged/inverse)

Ticker Fund YTD Return (%)
CHIS  Global X MSCI China Consumer Staples ETF 26.90
AFTY  CSOP FTSE China A50 ETF 23.82
FLRU  Franklin FTSE Russia ETF 22.97
ERUS iShares MSCI Russia ETF 22.47
KFYP  KraneShares CICC China Leaders 100 Index ETF 20.02
ASHR Xtrackers Harvest CSI 300 China A-Shares ETF 19.79
RSX VanEck Vectors Russia ETF 18.89
PEK VanEck Vectors ChinaAMC CSI 300 ETF 18.70
CHNX CSOP MSCI China A International Hedged ETF 18.63
KBA  KraneShares Bosera MSCI China A Share ETF 18.40

Note: Data measures total returns for the year-to-date period through June 5

 

Sure, these ETFs were up even more in April—as much as 38%—but the fact that China ETFs are outperforming to such a strong degree in the face of such negative news flow is pretty impressive.

Analysts point to relatively cheap valuations following last year’s drop in Chinese stocks and potential government buying as factors that could be propping up China ETFs in 2019.

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