Tuesday, September 17, 2013

Emerging Markets Fear Not the Taper

The Fed’s weekly disclosures show their tapering has already begun but markets are undeterred with hopes that Janet Yellen will keep the party going.  Emerging markets are supposedly most sensitive to the taper but there should be plenty of yen to offset any fewer dollars sloshing around those markets.  7 of today’s top 10 funds are emerging markets funds including China and they generally lagged yesterday but have outperformed since scoring well earlier this summer.

GXC holds today’s top rank in both models again and has gained more than 23% since the June 24th shift which is padding our performance numbers that should be posted today.  That was the story last fall when it and other emerging markets funds were giving our users huge outperformance.  As we have been reporting, things are looking very much like they did back then. We mentioned ADRE as a mover on July 1st, it made the top 10 later that month and holds 3rd place today, suggesting its outperformance is going to continue.  Same story with 6th place DEM also mentioned as an up and comer on that July 1st post and also padding our performance numbers.  WisdomTree’s EM small cap DGS jumped almost 200 positions into 12th place on August 5th when we reiterated Quant’s EM stance.  It has been less durable in the rankings but is back to 7th place today and has returned to outperforming after lagging into the late August scare.  When we highlighted EEM and Malaysia’s EWM on April 2nd, it turned out to be a late April Fool’s Day joke.  EEM has maintained top 100 status for most days since but EWM dropped down into the 200s on volatile sentiment scores.  EWM had a big move overnight into 9th place joining 8th place EEM who has spent most of September in the top 10.  Quant has no emotion but we must admit a fondness for EEM which performed so well for our users last fall.  Bookending the top 10 with China is FXI, another ETFGsm winner from last fall which achieved top 20 status on that June 24th shift and top 10 in July where it has remained since, except for 2 of the prior 3 days.

So fear not the taper. Maybe we should save that fear for the upcoming budget fight in Washington, another flashback to the fall of 2012.  Thanks for reading ETFGsm Daily Perspectives.

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