Emerging & Frontier Markets Charts

When is the right time to invest in the emerging markets?

  • No one really knows… but their time HAS to be coming soon… #4IR is on the way!
  • The emerging markets represent massive growth opportunity, but I’m not currently invested in any of the etf’s below… I follow them for news
  • Typically, my exposure to emerging markets is via global mining and commodities companies
  • That exposes my capital to geopolitical risk, so keeping up to date with the ‘haps around the world is a MUST…

One of the reasons I don’t just pick an etf and DRIP into it monthly is because of the confusion as to what an emerging market actually is

  • For example, China is considered an emerging market, but their civilization is thousands of years old
  • Further, with so much of the global economy relying on the growth of China’s economy, how we can say it’s “emerging?”
  • I know, I know… it has to do with openness to foreign investment, etc, etc, but come on!
  • Think about it… the birthplace of humanity, Africa, is an emerging market…
  • The place from which we emerged is emerging?
  • Just doesn’t make sense to me…

Featured Chart

  • If you had to pick just one etf to represent the emerging market portion of your portfolio, this would probably be it
  • Either that, or $EEM
  • By volume, those are the most liquid and popular
  • Also, you just can’t really go wrong with the Vanguard philosophy of low fees and broad diversification
  • Also check out $FM is you’d rather focus on frontier markets rather than emerging markets
  • If you’re willing to pay for some good money management, check out $HLMOX for active, tactical, frontier market investing
  • Also, from a tactical standpoint, $BLSAX is an interesting option: Long/Short Market Neutral Emerging Markets Fund … available from Schwab in $1 increments, so easy in…
  • However you decide to gain emerging market exposure, again, please make sure to diversify… you just never know what’s going to happen, when war is going to break out, or when governments will be toppled…
  • To that end, pick $VWO, $EEM, $HLMOX, $BLSAX, $FM as a base, and then add individual country exposure
  • For example, I like Africa, so I pick 25% to $HLMOX, 50% to BLSAX, and the last 25% to Africa, $NGE for Nigeria…

Africa

  • I love Africa!
  • The people are amazing, positive, and creative
  • $AFK is the best choice for broad Africa exposure, but it tends to focus on financials
  • Also, there is a tendency towards more weight on South Africa
  • Make sure to diversify! … Africa is a volatile place
  • $NGE Nigeria is very risky from a geopolitical standpoint, but I like it long term more than South Africa… there’s a lot of drama already priced into $NGE
  • $EGPT is also very volatile, so check out $GAF “Gafrica,” if you’re interested in North Africa/ Gulf specifically
  • Growth in Africa tends to be highly reliant on commodity prices

Middle East

  • The Middle East is a fascinating place!
  • It’s full of drama and history
  • Geopolitical hotbed of the world
  • Also the heart of oil and energy for the planet
  • Coincidence?
  • I think not…
  • $MES and $GULF are good choices for broad Middle East exposure… good liquidity and very popular
  • And I assume that they’ll add Iran at some point… as far as I know there still isn’t an Iran etf
  • $KSA, $PAK, $QAT are all expected to grow quickly over the next 5-10 years, so are suggested as good investment choices in many articles
  • Also, Israel has a massive innovation and VC startup/ tech industry… prepare for #4IR …

Latin America

  • Many investors like Mexico because of its proximity to the US…
  • Borders with the US limit geopolitical risk
  • And Cuba is coming online to investors
  • But, SOUTH America is MAJOR screwed right now…
  • Massive inflation, angry people, lack of goods and supplies… it’s ugly
  • So when does investor sentiment become the worst?
  • Let’s keep watching, because when sentiment is the lowest, that’s when we should consider investment…

Asia

  • From Bruce Lee to Nunchaku… I’ve always loved researching Asia!
  • Bruce Lee… China… cool. Kung-fu, great food, amazing culture and history
  • Nunchaku… Karate… Japan… also cool. Great food, great people
  • And, I can honestly say this, I’ve met LOTS of Indians, and never met one that I didn’t like… weird… I don’t even like everyone in my own family
  • So much to say: Asian culture has been a part of my life for as long as I can remember
  • There are MANY etf choices… stick to very liquid, highly traded investments
  • ASEAN countries are expected to grow quickly over the next 5-10 years
  • But, of course, everyone looks to China to grow the world economy, and China looks to be slowing down a bit
  • China can be compared to where US was at end of it’s Industrial Revolution
  • Disruption is occurring because of the industrial shift in Asia… is this an investment opportunity?
  • China is SMART … they’re trying to win the game of Civilization with an Economic Victory … keep watching China
  • Other interesting ETF choices to consider for China: $HAO, $YAO, $CN, $MCHI

Eastern Europe

  • Of all the emerging markets I understand and follow Eastern Europe the least
  • Why? Really, it’s just time… and my passion is more on the Africa/ Asia relationship
  • BUT, Eastern Europe has massive commodity resources and should not be forgotten
  • Especially because many think a war could be brewing in Eastern Europe with that whole Russia, Putin thing…
  • And, it’s the doorway for Russia to Europe, so…..