The time to target emerging market consumers with ETFs is here, ETF.com's Hougan says.
The era for accessing emerging markets with broad ETFs is on hold now that the China-fueled natural resources story of the past decade has begun to end, and investors should look to ETFs targeting nascent consumerism in specific pockets of the developing world, ETF.com's President of Analytics & Publications Matt Hougan said on CNBC.
Instead of yesteryear's stalwarts such as the iShares MSCI Emerging Markets ETF (EEM | B-100), investors need to look at the potential for solid growth in different regions, including Mexico, Poland and even China itself, Hougan told CNBC's Bob Pisani on the sidelines of ETF.com's 7th annual Inside ETFs conference.
"It's time to be specific in emerging market ETFs. From what we see, the baby is being thrown out with the bath water. The good countries and the bad countries are going down together," he said, referring to the pullback in the asset class since Federal Reserve Chairman Ben Bernanke first suggested last May the era of easy money would soon start drawing to a close.
Crucially, Hougan stressed that the predominating investment paradigm that has prevailed in the past 15 years—namely, a focus on the so-called BRIC countries of Brazil, Russia, India and China—is over.
Among the ETFs Hougan singled out were:
He also suggested countries like Poland were worth examining. Two ETFs canvas that central European country, the $298 million iShares MSCI Poland Capped ETF (EPOL | C-86) and the $29 million Market Vectors Poland ETF (PLND | C-86).
Hougan, throwing Pisani a curveball, said his favorite "emerging market" play these days is Spain, through the now $1 billion iShares MSCI Spain Capped ETF (EWP | B-94)—a playful allusion to the prospective nature of a country whose stock market was badly beaten up by the eurozone debt crisis.