My Favorite Emerging Market ETFs

By Roger Nusbaum | September 05, 2008 | 2:04 PM | 1 Comment

Yesterday's post about diversity in emerging market selection prompted a reader to ask what my favorite ETFs are for the three countries mentioned (Brazil, China and Hungary).

Unfortunately I am going to let the reader down. 

Not every country lends itself to being accessed through an ETF. First off, there is no Hungary ETF traded in the US. Hungary does have a small presence in various broad or regional funds but if someone really wants to buy Hungary they need to buy a stock. Magyar Telekom is the most easily accessed, it trades in the US under (NYSE: MTA). Hungarian Big Oil Inc (actually MOL Magyar) trades with ticker MMGYF but pink sheet trading is a little tougher. To be clear I have no position in Hungary.

The way I think of China and the ascendancy theme, I want to be in that part of China which leads me to think some of the simpler stocks are better bets. I recently bought China Mobile (NYSE: CHL) for clients I also think the toll roads are a way to access the ascendancy theme (1000 new cars sold every day). The easier money was made before in China, everything was going up. The ETFs all seem to own a lot of financial stocks. Finance is complicated, and getting more complicated, and capitalism is a little newer in China than elsewhere which creates a visibility for future mistakes to be made. 

Brazil is similar to China in this regard, as pertains to financial stocks and their weighting in the ETF. Brazil is resource story, it just seems simpler to own a resource name. It has been hit hard in the last few weeks but I have owned this one stock (talking about Vale ticker ( NYSE: RIO) for many years now and big corrections come with the territory.

Other countries do lend themselves to being accessed via an ETF. Australia comes to mind as one as does Canada, Russia and Taiwan among others. Don't confuse that comment with my saying buy those ETFs now but what I am saying is that I think the construction of the ETFs captures those countries pretty well for what I think investing in those countries is all about.

Wow! Thanks Roger! I appreciate your long and thorough response. I guess looking for a favorite emerging market ETF is a bit lazy; looking for the right stocks now seem like the better way to go. Thanks again. Submitted by Dan Tarte on Mon, 2008/09/08 - 11:33am » reply |