The emerging market countries and the exchange-traded funds that track them are playing an increasingly important role in the global economy and our global ETF portfolios.
Emerging market countries account for 85% of the world's population, 25% of world GDP and the Deutsche Bank estimates that they will generate 50% of global growth in 2007. During the last four years, emerging market countries had GDP growth overall of 7.7%. But because their stock markets are playing catch up, emerging market stock markets only account for 7% of world stock market value.
This is the opportunity.
Emerging market ETFs include iShares MSCI Emerging Markets (EEM) and Vanguard's slightly lower cost Vanguard Emerging Market (VWO). In the Vanguard ETF basket there are the following country allocations: South Korea, 15.7%, Taiwan, 12.4%, Brazil and China, 10.5%, Russia, 10%, South Africa, 8.6% and India and Mexico, 6.3%. There are also seven emerging market country iShares available if you prefer a rifle rather than shotgun approach. These ETFs cover markets in Brazil (EWZ), Malaysia (EWM), Mexico (EWW), South Africa (EZA), South Korea (EWY), Taiwan (EWT) and China (FXI).
By Carl Delfeld of the Chartell ETF Advisor
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