Emerging Market Investors Need Not Fear the Sell-off in China

July 20, 2015 | Author: EGA Investment Strategy | Categories: Chart of the Week, Emerging Markets
Emerging Market Investors Need Not Fear the Sell-off in China
Other than Greece, all eyes have been fixed on China. The recent collapse of the SHCOMP (Shanghai Stock Exchange Composite Index) evokes memories of 2007, when the last Chinese stock market bubble burst. From an emerging markets (EM) perspective, the MSCI China Index matters more than the SHCOMP and several differentiating features should assuage the fears of EM investors. The MSCI China Index never followed its mainland cousin to such extreme heights and its underlying constituents trade in Hong Kong and are mainly held by foreigners who have not normally purchased stocks on margin....
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Emerging and Frontier Markets Have Improved Diversification

July 14, 2015 | Author: EGA Investment Strategy | Categories: Chart of the Week, Emerging Markets, Frontier Markets
Emerging and Frontier Markets Have Improved Diversification
A portfolio consisting of just U.S. and EAFE is by no means diversified. The 52-week correlation between U.S. and EAFE equities is high at 0.76. Diversification may reduce portfolio volatility and also may serve to preserve capital by allocating money to a variety of different investments. Investors would be better served to concern themselves with portfolio-level volatility, rather than that of its component assets. The inclusion of EM and FM equities, as our chart shows, has consistently reduced inter-asset correlation considerably and improved diversification....
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Risky Business? Rethinking International Equity Allocations

July 13, 2015 | Author: EGA Investment Strategy | Categories: Investment Strategy, Emerging Markets, Frontier Markets
When approaching asset allocation, equity investors often follow a top-down, macro-economic approach to consider the merits of each country or region in their portfolio before considering the characteristics of individual securities. We have noticed that many investors focus on riskiness or volatility of an asset class at the expense of the overall risk-adjusted returns or how different investments work together in a portfolio. The inclusion of EM and FM equities has reduced inter-asset correlation considerably and improved diversification....
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The Emerging Markets Update: 2Q15 Review and 3Q15 Preview

July 13, 2015 | Author: EGA Investment Strategy | Categories: Investment Strategy, Emerging Markets, Frontier Markets
In a rollercoaster quarter, the MSCI Emerging Markets (EM) Index held on to slender gains outperforming both the S&P; 500 (+0.3%) and the MSCI Frontier Markets (FM) Index (+0.1%). Inflows returned to EM equity ETFs as the U.S. Federal Reserve pushed back the timing of its first interest rate hike. In the Emerging Markets Update, the EGA Investment strategy team discusses the events in the second quarter and previews their thoughts on what's in store for 3Q15....
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Emerging Market External Balance Sheets Look Healthy

July 06, 2015 | Author: EGA Investment Strategy | Categories: Chart of the Week, Emerging Markets
Mexico, Russia, Turkey, Brazil and Asia committed emerging market's original sin, borrowing too much in foreign currency, mainly the U.S. dollar. Crisis erupted when the Federal Reserve embarked on an aggressive interest rate hiking cycle and capital flight left EM external deficits unfunded. Since their currency crisis, EM have been steadily paying back their external debt and at this point have very little external debt....
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Emerging market investments involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, from economic or political instability in other nations or increased volatility and lower trading volume. Please call +1 888 800 4347 or click here access a prospectus online. Investing involves risk, including possible loss of principal.

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