Tag Archive | "investing in emerging markets"

Investing In Emerging and Frontier Markets


By

Why Investing In Emerging Markets Using Funds Makes Sense

Investing In Emerging And Frontier MarketsFor investors looking to put money into more speculative, but potentially more rewarding investments, investing in emerging and frontier markets is worthy of consideration.  The world of investment is essentially divided into three broad categories:  developed markets, such as the United States and the developed world, emerging markets, such as China and the developing world, and frontier markets, such as Botswana and countries that are making the transition to the developing world.

Emerging and frontier markets are located on the continents of Asia, Africa, and South America.  Out of these three continents, Africa is often overlooked by investors looking for investments in frontier markets.  Africa has some of the fastest growing economies in the world, as countries emerge from their undeveloped state and make use of their plentiful natural resources to develop their economies.  One thing that emerging and frontier markets tend to have in common is a citizenry that is struggling to improve their standard of living, which is a natural driver of economic growth.  These countries also tend to have natural resources that are in the process of being developed, which provides a boost to gross national product and eventually per capita income.

Frontier MarketsWhile investing in developed markets is the safest bet amongst the three broad investment categories, it also provides a lower economic growth rate and potentially less robust returns than high growth emerging and frontier markets.  The difference between emerging and frontier markets is sometimes a bit unclear, as frontier markets are moving in the direction of becoming emerging markets.  Emerging markets are defined as countries that are rapidly industrializing and have a relatively short but established tradition of development.  Frontier markets are defined as countries that are in the process of transforming from non-industrialized economies to rapidly industrializing economies.  While emerging markets are a bit safer to invest in, since they are already rapidly industrializing and often experience growth levels well above those experienced in developed markets, frontier markets have the potential for explosive growth, which makes the profit potential even higher than emerging markets.

Researching and investing in companies located in emerging and frontier markets is very difficult.  Obtaining information can be difficult, due to varying reporting standards within their respective countries.  Also, the stocks of companies located in emerging and frontier markets are often traded locally, and are not easily accessible to investors located in developed countries.  The easiest way to invest in emerging and frontier markets is to buy mutual funds, exchange traded funds (ETFs), or exchange traded notes (ETNs) that invest in securities of companies either located in emerging and frontier markets or that obtain a significant portion of their revenue and income from operations in emerging and frontier markets.  Although there are fees associated with investing in emerging and frontier markets via funds, these fees are well worth the cost, since the research of suitable companies and purchase of securities is handled by the investment professionals that manage the funds.

Investing In Emerging Markets Using Funds

Emerging Markets
There are a number of funds that can be used to invest in emerging and frontier markets.  The following are some examples of funds that can be used to invest in emerging and frontier markets.  Due to the speculative nature of investments in emerging and frontier markets, only a portion of an investment portfolio should be allocated to emerging and frontier markets investments, such as the following investment fund ideas.

  • BLDRS Emerging Markets 50 ADR Index Fund (NASDAQ: ADRE) – ADRE is an emerging markets fund that invests in emerging markets companies that are included in the Bank of New York Emerging Markets 50 ADR Index.
  • SPDR S&P Emerging Latin America ETF (NYSE: GML) – GML is an emerging markets fund that tracks the performance of the S&P Latin America BMI Index, which includes companies based in or doing business Latin American emerging markets.
  • SPDR S&P Emerging Markets Small Cap (NYSE: EWX) – EWX is an emerging markets fund that invests in the small capitalization companies that do business in emerging market countries. The fund is designed to generally track the performance of the S&P Emerging Markets Under $2 Billion Index.
  • Wasatch Frontier Emerg Sm Countrs Inv (WAFMX) – WAFMX is a mutual fund that invests in equities of companies that do business in small emerging and frontier markets.
  • HSBC Frontier Markets A (HSFAX) – HSFAX is a mutual fund that invests in equities of companies doing business in frontier markets.  It generally invests in frontier market companies with market capitalizations of $100 million or more, but can invest in companies of any size.
  • iShares MSCI Frontier 100 Index (NYSE:  FM) –  FM is a frontier markets fund that tracks the performance of the MSCI Frontier Markets 100 Index.
  • Market Vectors Africa Index ETF (NYSE:  AFK) – Market Vectors Africa Index ETF focuses its investment in economies of countries located in Africa, which boasts some of the fastest growing economies in the world.  The fund is considered to be mainly a frontier markets fund, since many of the African countries that it invests in have frontier markets.

It is important to keep in mind that emerging and frontier markets are notoriously volatile, and therefore the funds that track them are also volatile.  However, in the long term, emerging and frontier markets have great growth potential, which could translate to above-average growth rates for companies doing business in these fast growing markets and to above-average returns for funds invested in these companies.

Stay up to date on stock trading ideas by getting on our FREE eMail list!

Posted in Stock Market NewsComments Off on Investing In Emerging and Frontier Markets

Investing In Emerging Markets Using Funds


Investing In Emerging MarketsBy

While investing in developed world countries like Germany, Japan, and the United States is the cornerstone of many investment strategies, investing in emerging markets is a good way to capture the higher economic growth that occurs in emerging market countries. There are billions of people in emerging market countries that are working hard to improve their lives, which in turn is causing explosive growth in their economies, which is eventually reflected in the price of stocks. Savvy investors looking to beat the stock market averages look for investment opportunities in emerging markets economies. One of the safest ways to capture emerging markets growth without exposing an investment portfolio to excessive risk is using funds, including mutual funds and exchange traded funds (ETFs) to invest in securities of companies either located in emerging markets or that derive a significant portion of their revenue and income from operating in emerging markets.

Investing In Emerging Markets Using Funds

The following are some fund ideas for investing in frontier market and emerging markets. Frontier markets are emerging markets that are at the lower range of market capitalization and liquidity in the spectrum of emerging markets. It is important to keep in mind that some of these funds have sales loads and past performance is not an indication of future performance.

– BLDRS Emerging Markets 50 ADR Index (NASDAQ: ADRE) – The BLDRS Emerging Markets 50 ADR Index is an ETF that invests in companies in the Bank of New York Emerging Markets 50 ADR Index.

– SPDR S&P Emerging Markets Small Cap (NYSE: EWX) – The BLDRS Emerging Markets 50 ADR Index is an ETF that tracks stocks in the small capitalization segment of emerging market countries. The fund generally tracks the performance of the S&P Emerging Markets Under $2 Billion Index.

– Wasatch Frontier Emerg Sm Countrs Inv (WAFMX) – Wasatch Frontier Emerg Sm Countrs Inv is a mutual fund that invests of its assets in equity securities of companies that do business in small emerging market countries and frontier markets.

– HSBC Frontier Markets A (HSFAX) – HSBC Frontier Markets A is a mutual fund that tries to achieve long-term capital appreciation through investments in equity securities of companies that generate a majority of their revenues and income in frontier markets.

– CNI Charter Emerging Markets N (RIMIX) – CNI Charter Emerging Markets is a mutual fund that invests with the gaoal of long-term capital appreciation. The fund invests in equity securities of companies that operate mainly in emerging market countries, with a focus on Asia.

Stay up to date on stock trading ideas by getting on our FREE eMail list!

 

Posted in InvestingComments Off on Investing In Emerging Markets Using Funds

There Are Good Reasons for Investing in Emerging Markets


Investing In Emerging MarketsBy

Investing in Emerging Markets: Is It for You?

There is an increasing interest in emerging markets among investors today. Established markets, such as those in the US and in Europe, seem plagued by long-term issues such as government debt. Emerging markets seem fresh and exciting in comparison. However, this is just a surface impression. Is investing in emerging markets a good idea for the average investor?

Pros and Cons of Emerging Markets Investment

Emerging markets share an advantage with low-priced and newer securities on the stock exchange. They have a lot of upside. Established markets, just like high-priced stocks, can generally only grow in incremental amounts. A lower-priced asset, just like the entire economy of a developing country, can grow in exponential terms. It is much more possible to make rapid and steep gains with an investment in an emerging market.

These newly developing regions are usually not burdened with as much regulation. This allows companies to classify more revenue as profit because they do not have to spend as much on infrastructure and bureaucracy. Consequently, they can divert more profits to shareholders.

In fact, companies in already established markets noticed this potential long ago. Part of the reason that many of them have managed to survive during this recession is their own investment in developing nations. They are willing to take the risks associated with these markets in exchange for the possibilities of high returns.

There are some risks. These risks are not as severe in some of the more established emerging markets, such as Russia and China. However, other emerging markets are located in countries such as Pakistan and Egypt. The ills hampering advancement in these countries need no description. When you invest in emerging markets, you accept risks such as political unrest in exchange for the opportunities to derive large profits from your assets.

Stay up to date on investing in emerging markets by getting on our FREE eMail list!

Posted in InvestingComments Off on There Are Good Reasons for Investing in Emerging Markets


Sign Up for Text Message Alerts

By clicking 'Join Now', you agree to our Disclaimer and Privacy Policy. We are 100% Anti-Spam and will never share or sell your information!

Follow Us on

Facebook

Twitter

Google+

Pinterest

Trade With…


© 2020 MJ Capital, LLC | All rights reserved