Monday, August 5, 2013

Emerging Markets Rising

Quant’s recent affection for China and other emerging markets has become more pronounced with 10 of today’s top 25 funds fitting those categories.  The now familiar China funds, GXC, FXI and FCHI hold 1st, 3rd and 8th place this morning. WisdomTree’s Emerging Markets High-Yielding Fund (DEM) has gotten many mentions since the late June selloff and remains in 5th place and new to this space is the PowerShares S&P Emerging Markets Low Volatility Portfolio (EELV) rocketing 500 places into 9th place on an improved Fundamental print and better short and intermediate term technicals.

Looking deeper than the top 10, we find the theme gaining strength with other big movers into the top ranks.  WisdomTree’s EM small cap DGS jumped almost 200 positions into 12th place and SPDR’s S&P Emerging Asia-Pacific Fund (GMF) gained 33 positions into 17th as their broader EM fund, GMM, jumped 48 positions into 26th place tied with the WisdomTree Asia Pacific ex-Japan Fund (AXJL) which gained 73 places.  ADRE has been scoring well since early July and remains in 19th place today after dropping 13 positions as other funds score better.

Other country specific names in the emerging space are also scoring well.  We had thought Egypt’s 13th place EGPT moving into the upper ranks in mid June was a mistake as the fund traded lower but it closed Friday above a resistance line going back to April which has boosted all three technical sub scores.  On June 26th we said calling bottoms is tricky when we highlighted India’s 24th place INXX.  Closing at a new low Friday, it has not enjoyed the rebound of other EM countries but its Fundamental Score has done nothing but rise, up to 97.3 today even as its technical score falls to a lowly 33.1.  The Market Vectors Russia Small-Cap Fund (RSXJ) has done better since that June low and gets its first mention today after another rocket move of 261 positions into 37th place.

Most of the big movers have resulted from better Fundamental Scores as earnings reports hit the data stream.  The financial media have been heralding better than expected US earnings despite year over year declines and extraordinary charges that are not overlooked by Quant’s algorithms.  A clear example of the benefits of ETFG's quantitative method is the ability to cut through the noise and keep the important historical facts in perspective. Thanks for recognizing that and good luck this week. 

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