Friday, August 30, 2013

High Reward and Risk in Indonesia

Emerging markets are getting a bounce in price and scores after a rout that has inflicted damage mostly on countries with large current account deficits.  With more than a third of AUM in the financial sector, the iShares MSCI Indonesia Investable Market Index Fund (EIDO) is a big Quant mover today jumping 89 positions into 6th place.  It has an excellent 9.14 Green Diamond Reward Rating driven by a 98.1 Fundamental Score suggesting it is about as cheap as it has been since launching in May of 2010.  Being down more than 25% year to date explains its weak Behavioral Score and its Red Diamond Risk Rating rising up to an above average 5.52.

This had been a low risk fund when it ranked and performed so well last summer and fall.  It dropped out of the top 100 in late 2012 which may have been early but was higher than now.  It had a Risk Rating below 3 then but that has risen throughout 2013 as the fund has fallen in price.  Our Risk Ratings are not predictive but reflect attributes of a product’s trading and composition falling under several risk categories that you can see on the Red Diamond Risk Ratings page.  View all products and sort by any category or put a symbol or name in the search box to see it alone.  EIDO shows a high 7.40 Deviation score and an also high 6.84 Volatility score which are typical of leveraged and inverse products and reflect its recent rout.  That price drop has brought the Fundamental Score up so high but the factor most likely to drive performance does not get scored in our models and that is the value of the Indonesian rupiah.

Before investing in the emerging markets you need to fully assess the implications and ETF Global® Risk and Reward Ratings are valuable tools in that process.  Fed taper talk is becoming increasingly important to the emerging markets and is likely to affect performance but if you are looking for high risk and reward, EIDO may fit your criteria.  Do your due diligence, fully assess the risk, PDF the Tearsheet and maybe take a trip there to make sure, it shouldn't cost too much after the currency slide.  ETF Global® is proud to serve the financial community laboring to serve their clients in a low rate environment, enjoy the long Labor Day weekend! 

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