The 5 Hottest Emerging Markets ETFs For 2014
Charles Sizemore | Dec 15, 2013 01:18AM ET
2014 will be the year that emerging markets make a comeback. Emerging market stocks, as measured by the iShares MSCI Emerging Market Index ETF (EEM), have been drifting lower for nearly three years and are still well below their pre-2008-meltdown highs. Since the second quarter of 2011, emerging markets have trailed the S&P 500 by over 50%. To say that they’ve been collectively left in the dust would be an understatement.
But while the sector has been largely ignored over the past three years, some real values are emerging. As I wrote recently, when measured against national GDP, most of the largest emerging markets look absurdly cheap and are priced to deliver annual returns well in excess of 15%. By GuruFocus estimates, China is priced to deliver an almost ridiculous 34.3% per year.
So, with no more ado, I’m going to offer my five favorite emerging-market country ETFs for 2014.
Nigeria
I’m going to start with a country that will probably make you do a double take: Nigeria. You can get access to Nigerian stocks via the Global X Nigeria Index ETF (NGE).
I would assume that two questions immediately popped into your mind because they are the same two questions that immediately popped into mine:
- Nigeria has a stock market?
- And it’s not a scam asking you to sign your bank account over to the “rightful king of Nigeria” or some such nonsense?
Yes, Nigeria does have a stock market, and no, it’s not a scam. Companies engaging in email and fax scams on hapless Americans only comprise about 34% of the index.
That was a joke, of course. Nigeria’s stock market is full of companies that are well-positioned to profit from the country’s burgeoning consumer economy, such as Nigerian Breweries and Nestle Nigeria, a local subsidiary of Swiss confectionary giant Nestle (NSRGY).
Financial services, at 40% of the index with energy making up another 26%. Those are higher concentrations than I would ideally like to see, but I don’t consider them major negatives.
Why invest in Nigeria? Let’s start with growth. From 2005 to 2013, Nigeria has to receive his FREE weekly e-letter covering market insights, global trends, and the best stocks and ETFs to profit from today’s exciting megatrends.
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