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Global Gains v. iShares MSCI Emerging Markets



September 10, 2010 – Comments (5) | RELATED TICKERS: EEM

Perhaps you know this, but the iShares MSCI Emerging Markets Index (EEM) is the most popular international ETF with more than $40 billion of assets. Yet that popular fund and our Global Gains team have a very different view of how to tap the potential of emerging markets. Just take a look at how differently we are allocated across sectors:

Here's EEM:

And here's GG:

Immediately you should see how overexposed EEM is to financials and commodities -- what I would consider the plays of emerging markets past -- and how we are overweight the consumer, infrastructure (industrials), and telecom (another consumer play). We also have much more healthcare exposure, which is one of the fastest-growing industries in places like China and India.

All told, I think EEM has it backwards, which is why its performance has badly lagged a broader emerging markets composite index over the past five years.

This, of course, begs the question. How are you getting your emerging markets exposure?

5 Comments – Post Your Own

#1) On September 10, 2010 at 4:10 PM, EnigmaDude (58.51) wrote:

Nice pie charts!  This post is very informative and at a high level I agree with your investing philospohy for emerging markets.  But I would nitpick a little if I were managing the fund.  For example, I would adjust the percentages in consumer discretionary up and staples down a tad.  But that's just me.

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#2) On September 10, 2010 at 4:17 PM, vriguy (65.22) wrote:

VWO, supplemented with VSS and VEU.

VWO's costs a very reasonable 0.27%. The heaviest country weightings are China (17%), Brazil (16%), South Korea (12%), Taiwan (11%), and South Africa (9%). Top sector weightings are financials (24%), energy (15%), materials (14%), technology (14%), and telecom (9%); looks a lot like EEM, I guess.

VSS/VEU cover non US markets, including emerging markets. 


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#3) On September 10, 2010 at 9:21 PM, MegaEurope (< 20) wrote:

How has GG done, somewhere between EEM and Emerging Markets Composite?

By the way Mmbop, has GG ever commented publicly on accusations of accounting irregularities at CGA, CMFO, and Chinese smallcaps in general?  It seems like they are everywhere these days.

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#4) On September 27, 2010 at 8:23 PM, Airdriver100 (< 20) wrote:

So what is the blue line, the "broader emerging markets index"?

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#5) On October 22, 2010 at 9:22 PM, 8k2u7FxK3QqlagX (< 20) wrote:

Umm, yeah, nice pie charts, nice line return charts. Whiy is GG not in the return chart? As MegaEurope asked, how has GG done?

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