Holdings of Ten Emerging Market Funds
This post started with a list of emerging market funds found at the site below.
I examine and describe the holding and recent returns on the 10 largest of these funds.
I comment on the holdings of these funds, the risk of these funds and the risk of some of the holdings.
List of Funds, Discussion of Geographic Diversifications, and YTD returns:
|Some Information on Ten Emerging Market Funds|
|Symbol||Fund||Geographic Concentration||YTD Returns|
|VWO||Vangarud FTSE Emerging Market||7 of top ten holdings are in China||-7.32%|
|IEMG||I Shares Core MSCI Emerging Market||7 of top ten holdings are in China||-6.95%|
|EEM||I Shares MSCI Fund||7 of top ten holdings are in China||-7.44%|
|SCHE||Schwab Emerging Markets Fund||6 of top ten holdings are in China||-7.34%|
|FNDE||Schwab Fundamental Large Firm Emerging Market Index||Largest holding is from Korea and second and third largest holding are Russian. Top 10 holdings also include companies from China, Brazil and Taiwan||-6.71%|
|DEM||Wisdom Tree Emerging Markets Equity Income Fund||Top two holdings are Russian. Most other top ten holdings are form China or Taiwan.||-4.54%|
|RSX||Van Eck Vectors Russia ETF||All holdings appear to be in Russia.||4.36%|
|GEM||Goldman Sachs ActiveBeta Emerging Markets Equity ETF||7 of top ten holdings are in China||-6.75%|
|SPEM||SPDR Portfolio Emerging Markets ETF||6 of top 10 holdings are in China||-6.54%|
|DGS||Wisdom Tree Emerging Markets Small Cap ETF||Top 10 holdings are less than 9 percent of all holdings. Highly diversified, smaller companies.||-7.34%|
Many of the funds have a very large share of their funds in China. In fact, some of the emerging market funds could accurately be called China plays.
Three of the funds have substantial issues in Russia. Also, most but not all, of the Russian holdings are in the oil and gas sector. Important to research holding If concerns about corruptions and sanctions would deter you from investing in Russia. Energy funds that are not in Russia may be preferable to Russian energy plays.
Nine of the Ten funds have negative YTD returns. The fund that exclusively invests in Russia has a +4.36% return. This fund performed really poorly in prior years. The YTD return on U.S. large cap stocks is around 6.0%, largely because the market has been up for the past week or so.
Can investments in emerging market ETFs provide insurance against a major downturn in the U.S. market?
Short answer is probably not: The downturn in emerging markets in the 2007 to 2009 crisis was larger than the downturn in large-cap U.S. stocks.
Go here for discussion of emerging market funds during the financial crisis
Thoughts on specific holding of emerging market funds:
Emerging market funds have some well know reputable holding and some firms with dubious reputations, and some firms with little name recognition.
The most successful holdings of the funds in this sector include: (1) Alibaba, (2) Tencent and (3) Baidu Inc.
Investors who want a taste of advanced emerging markets or China may be better off directly investing a small fraction of their wealth in these companies.