Emerging Market Income ETFs

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Average returns in this Category	3 months return	6 months return	12 months return	YTD return

Emerging Market Income	13.35%	64.85%	-3.25%	46.41%
Emerging Market Equity	16.02%	46.32%	13.02%	35.52%

Ticker SPY	Name	3 months return	6 months return	12 months return	YTD return

ETF	Emerging Markets Telecommunications Fund (ETF)	12.96%	43.79%	-1.74%	25.17%

GHI	Global High Income Fund (GHI)	15.73%	64.44%	-2.48%	51.75%

MSD	Morgan Stanley Emerging Markets Debt (MSD)	14.95%	34%	9.2%	32.67%

EDD	Morgan Stanley Emerging Markets Domestic Debt Fund (EDD)	8.25%	48.7%	3.15%	31.27%

MSF	Morgan Stanley Emerging Markets Fund (MSF)	18.13%	72.46%	-10.73%	57.13%

SCHE	Schwab Emerging Markets Equity ETF	21.04%	11.23%	81.38%	8.63%

EMF	Templeton Emerging Markets Fund, Inc (EMF)	5.97%	91.7%	3.59%	77.58%

TEI	Templeton Emerging Markets Income Fund (TEI)	19.83%	55.33%	5.41%	51.42%

VT	Vanguard Total World Stock ETF (VT)	16.35%	51.44%	-4.14%	25.77%

ESD	Western Asset Emerging Markets Debt Fund, Inc (ESD)	17.61%	55.33%	7.1%	34.23%

EMD	Western Asset Emerging Markets Income (EMD)	16.99%	55.48%	3.84%	46.31%

SBW	Western Asset Worldwide Income Fund, Inc (SBW)	13.77%	46.08%	-3.46%	27.92%


	About Emerging Market Income ETFs
Emerging Market Income ETFs Overview and forecast Even the name Emerging Market Income ETFs is somewhat misleading. These ETFs hold equity in companies like Petro China, one of the biggest companies in the world. The Emerging Market Income ETFs have an image problem, because they're associated by default with the less reputable emerging markets. Many Emerging Market Income ETFs hold good balanced equity, debt and high yield securities, and they're actually performing well. Their prices have basically followed the rebound since the 2008 crash, rising in off lows in that period. These ETFs relate to different markets, too, so as a category, they're quite diverse. As traders, the Emerging Market Income ETFs have some positive and some negative aspects. As you can see from the Rates of Change (ROC) on our charts, they move well over time, but they don't move much, usually, or fast. The odd exceptions are one off purchases. Volumes are pretty good, but the overall situation for traders is that they're erratic. Short term (6 months) In the six month time frame the Emerging Market Income ETFs can do a lot. Templeton Emerging Markets Fund, Inc (EMF) managed a rise off lows under $8 to a peak of $16 in three months from March 2009 to June. That's a good return in anyone's language, and the market supported these rises in six figure volumes. Value for traders over these periods is very much a matter of volumes and price margins. A check of trading charts will show that apart from the crash period, the Emerging Market Income ETFs tend to have relatively shallow peaks and troughs, compared to other ETFs. Even the crash didn't produce the massive spikes we saw in the Dow based ETFs. Medium term (2 years) The Emerging Market Income ETFs will definitely come into their own, it's really a matter of when. They've proved to be more resilient, ironically, than ETFs working in the major indices. Investors and traders would be right to be suspicious of atypical spikes in this category, or overheating, but the indications are that they're quite solid, not neurotic, investments. The asset bases of the Emerging Market Income ETFs are a positive in most cases, but weighting can affect returns, when big name index holdings are hit by sudden moves. There's a mitigation effect in the spreads, but these moves do affect ETF performance, and it's almost unreasonable to expect global markets not to throw in a few chain jerking moves. Long term (5 years) Historical performance is anything but a criteria for the Emerging Market Income ETFs and their holdings. They were entering new territory prior to the 2008 crash, and although they've had a setback, the likely default position will be to get back on track ASAP. These are Emerging Markets in more sense than one. Their own financial markets are still developing, and it's quite likely that they'll move into the more advanced and lucrative financial modes quickly. These economies are still evolving into their modern forms, and there will definitely be a lag time between old and new. That may affect some of the more established Emerging Market Income ETFs as their holdings remodel themselves. Their holdings' performance could be restricted in the transition mode. The long term view is more blurred by possibilities than by theories, but a definite trend to the upside can be expected at the end of the recession. Qualifiers to projections The Emerging Market Income ETFs are pretty cosmopolitan, and investors aren't likely to get stuck with local market effects. That said, they do tend to hold Chinese, Brazilian and equity and other instruments in highly liquid, aggressive markets, and these can be volatile. Those not used to seeing the kinds of moves these markets can make would be advised to research them. If anything, the Emerging Market Income ETFs are conservatively structured. They're not showing any signs of the deadly side of the markets in which they invest, which is very good news for investors and traders. That specifically does not mean, however, that anyone should discount those risks. Investors aren't likely to wake up and find the tide has come in and taken their money, but they can find their positions eroding quite quickly enough. Risk assessment should be comprehensive, and there are choices of fund available to investors in Emerging Market Income ETFs.

Last Updated on: 2010-01-14 02:03:40

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