If not China, Then Which Emerging Market?

LuxLiving · #1 (**permalink**) 02-20-2007, 07:58 AM

If not China, Then Which Emerging Market would you currently invest in? Why? And under which vehicle?

kv968 · #2 (**permalink**) 02-20-2007, 08:40 AM

I wouldn't invest in just one emerging market but an index or mutual fund that encompasses a few of them. I'm currently in T Rowe's Emerging Europe and Mediterranean Fund (TREMX). Another good alternative if you'd like to go that route is Vanguard's Emerging Market Index. I just find that the volatility of the diversed emerging market funds are enough for me let alone trying to pick just one country that's going to be "hot".

meaghanchan · #3 (**permalink**) 02-20-2007, 06:19 PM

I agree with kv968- why take a chance on choosing one and hoping you'll be right? Invest in all emerging markets with one fund, like Vanguard's Emerging Market Index.

Here's what it includes, as of 1/31/2007:

Korea 14.9%
Taiwan 12.3%
Brazil 10.7%
China 10.6%
Russia 9.9%
South Africa 8.5%
India 6.8%
Mexico 6.6%
Malaysia 3.1%
Israel 2.6%
Poland 1.9%
Turkey 1.7%
Chile 1.6%
Indonesia 1.6%
Thailand 1.5%
Hong Kong 1.0%
Hungary 1.0%
Argentina 0.9%
Czech Republic 0.9%
Egypt 0.6%
Philippines 0.6%
Peru 0.5%
Colombia 0.2%

jen-taylor · #4 (**permalink**) 02-21-2007, 07:18 AM

i believe these are the emerging market etf (bric countries, eastern europe, south america, southeast asia).
http://finance.google.com/finance?q=EEM
http://finance.google.com/finance?q=EFA

LuxLiving · #5 (**permalink**) 02-21-2007, 11:19 AM

I already have an existing EM index at Fidelity that I'm happy enough with - I'm interested in making a pure play on my own w/my play money and was just wondering what people's thoughts were. Should of made that clearer.

LuxLiving · #6 (**permalink**) 02-22-2007, 05:25 AM

Educational moment for those that don't know - BRIC, def. = in the investing world this acronym was started for those wanting to invest in the emerging markets of Brazil, Russia, India & China.

JBinKC · #7 (**permalink**) 02-22-2007, 06:54 AM

Are you implying a country fund or individual stocks and if the latter what market cap and industry? One thing I can say is these emerging markets really can help you diversify your industry portfolio as it can allow you to buy a sector you wouldn't touch with a 10 foot pole here in the states.

LuxLiving · #8 (**permalink**) 02-22-2007, 09:58 AM

Thanks JBinKC - wow, am I slow or what?? I'm just now figuring out you are J.B. in Kansas City, is that right?? I kept thinking of you as J. Binkc!

Bink - Bink!!

I'm thinking country and perhaps commodity based. Drinking water and industrial metals needed for infastructure construction seem to spark my interest for some reason.

I also keep thinking of the large Chinese population and their need for increased financial services as well as future retirement vehicles.

Other than these thoughts I've not researched much or confirmed the true needs in any of these areas.

I'd appreciate your more educated input. At the moment I keep thinking a nice basket of etf's might do the trick for my need to play.

jIM_Ohio · #9 (**permalink**) 02-22-2007, 10:38 AM

Consider the market caps of some of those countries is less than that of Microsoft or other large US companies.

The scale of the investment difference is considerable (Emerging markets might be 1/100 to 1/1000 the market cap of a single US company or US broad index).

I am hearing of people putting 50% in international, 25% in emerging markets and that has risk to it. High returns are nice... but in my single emerging market fund (PRIDX- T Rowe International Discovery), I expect one home run year (>25% returns) and 2-3 avg years (6% to -25% returns). I cash my gains out often and keep the allocation small.

I also own PREMX (T Rowe Emerging Markets bond). This is a junk bond fund with good mid term results. But again I cash my gains out often.

JBinKC · #10 (**permalink**) 02-22-2007, 11:08 AM

I agree with your logic. I also have a nice exposure to stocks in key industrial metals like Nickel and Molybdenum. As well as a large exposure to oil, gas and uranium. Most of my US holdings is in agriculture.

One stock I have casually mentioned in the past that I REALLY like is Dynatec in Canada. The US ticker is DYTCF. At current nickel prices I figured the stock's FMV to be around $17CDN per share based on projected cash flows from a 40% interest in a mine they are now in the process of developing in Madagascar. The stock currently has twice as much free cash on its balance sheet than its net worth if you include its 25% stake in FNX mining.

The stock is up about 25% alone this week though to around $2.53 CDN as we speak.