Emerging-Consumer ETFs As Varied As A Mall

February 19, 2015

 

Finally, the cap-weighted iShares MSCI Emerging Markets Consumer Discretionary ETF (EMDI | D-43) focuses exclusively on consumer cyclical stocks. It holds roughly 90 securities from countries that MSCI classifies as emerging, meaning South Korean companies like Hyundai, Kia and LG Electronics dominate the fund's holdings.

The differences in structures lead to a spectrum of returns, but Figure 1 indicates the funds do follow roughly the same trajectory.

 

 

But there are still considerable differences. Over the past year in which emerging markets experienced turmoil, causing the broad iShares Core MSCI Emerging Markets ETF (IEMG | A-98)  to return -2.66 percent, EMCG managed to eke out a gain of 1.70%.

Also pay close attention to valuations and volatility. ECON's 23.76 trailing 12-month earnings per share (Figure 2) gives it a huge growth bias over its peers. ECON also exhibited the highest daily volatility over the past year, though EMDI wasn't too far behind on that front.

 

 

Major differences in country breakdown can also impact each respective fund's performance (Figure 3). Each emerging economy is currently experiencing separate challenges politically, geopolitically and economically, so those factors are likely to weigh on each fund.

 

 

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