Monday, August 12, 2013

Emerging Markets Dominate

We begin the week with 3 emerging markets funds in the top 10 joined by 2 China funds and one representing India.  Europe gets 10th place leaving only 3 top 10 positions that are held by US funds which are the familiar 1st and 2nd place XME and XOP and 6th place TTFS which we highlighted on July 5th.  So as WSJ declares the emerging world is losing its growth lead, Quant says not so fast.

We highlighted today’s 10 Green Diamond GXC on Thursday and it continues to score and perform well as does FXI with similar exposure; they rank 3rd and 4th respectively.  The 3 emerging markets funds ranked 5th, 7th and 8th are the PowerShares S&P Emerging Markets Low Volatility Portfolio (EELV), SPDR S&P Emerging Markets Fund (GMM) and WisdomTree Emerging Markets High-Yielding Fund (DEM).  Like the China funds, all 3 rank highly thanks to strong Fundamental Scores led by EELV’s 97.9 with the other two getting close to 90. Behavioral Scores are not as strong but maybe today’s newspaper will drive some bears into the sector to boost the contrarian sentiment readings.  Technicals are good but not great in the low 60s but will get better if they continue to trade as well as they have in recent days.  India’s 9th place INXX has not traded well since we highlighted it on June 26th with a warning about its high Risk Rating and dependence on the weakening Indian Rupee.  The currency hit an all time low last week but is getting a bounce today on central bank pledges to curb its supply.  The fund got a similar bounce but still gets a technical score below 50 although sentiment is better at 68 and fundamentals are excellent at 97.3.  Closing out today’s top 10 is the SPDR DJ Euro STOXX 50 Fund (FEZ) which we highlighted last Wednesday.

Pre market trading suggests this emerging markets stance is going to continue to outperform today.  The emerging markets may be slowing but are still registering growth rates at multiples of the developed world.  With the US trading near record highs, Quant has become enamored with these funds that have already had meaningful corrections this year.   Thank you for becoming enamored with ETF Global®, good luck this week and congratulations to emerging PGA golf champion Jason Dufner.

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