ETFs With The Lowest Valuations: 2017

April 12, 2017

Take the iShares MSCI Russia Capped ETF (ERUS). Its P/E of 7.86 gives it the distinction of being the ETF with the lowest price-to-earnings ratio. Concerns about Russia's involvement in Ukraine, Western sanctions and low oil prices have kept pressure on Russian stocks during the past few years.

Some investors also worry about nationalization, where the Russian government takes over companies at the expense of shareholders, as it's done in the past.

Investors unfazed by these concerns have the opportunity to buy Russian stocks at a discount, which could pay off in the long term. In addition to ERUS, the SPDR S&P Russia ETF (RBL), with a P/E of 9.11, and the VanEck Vectors Russia ETF (RSX), with a P/E of 10.03, are two other Russia ETFs trading on the cheap.

Low P/Es For Turkey & China ETFs

As the case of Russia illustrates, there's no free lunch. ETFs that have low P/Es typically do for a reason. It's up to investors to decide whether those low valuations offer a long-term opportunity.

Many of the other cheap ETFs on the market are in the same boat. The iShares MSCI Turkey ETF (TUR) is another name on the list. Political uncertainty following a failed coup last year, credit rating downgrades, rising interest rates and a plunging currency have come together to weigh on Turkish stocks. In turn, TUR currently has a P/E of 8.29.

China is another emerging market country that has fallen out of favor with investors, for a number of well-known reasons. Last year, financial market headlines were dominated by talk of China's economic slowdown.

The Global X China Financials ETF (CHIX), the CSOP FTSE China A50 ETF (AFTY) and the Guggenheim China Real Estate ETF (TAO) are all trading with P/Es of less than 10.

The Tierra XP Latin America Real Estate ETF (LARE), the Legg Mason Emerging Markets Low Volatility High Dividend ETF (LVHE) and iShares Europe Developed Real Estate ETF (IFEU) are a few other interesting funds currently trading with low valuations.

For a full list of low-P/E ETFs, see the tables below. Also included is a list of funds with low price-to-book (P/B) ratios, another valuation metric often used by investors. 

 

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