Investing in Emerging Markets

If you have been following the stock market for the past 5 years one thing that really stands out are the emerging markets. The returns on emerging market funds and ETF’s have just been mind boggling with most of them returning more than 25% in the past 5 years.

There are many mutual funds out there. Personally I avoid most of the managed ones because I don’t have time to research and pick the best ones and the expense is very high on managed ones. So I have been going with the ones that follow the index. I use (Exchange Traded Funds) ETF instead of mutual funds to capture the market timing. I find it easier that way.

My personal favorite is the symbol EEM – It’s well diversified (Of course it has recently increased its stake on Russia. I am not sure what to think about that!) and has had some strong performances over the past 5 years. Of course it had a steep fall in early June losing almost 26% (oops!) but is strongly back now. So I guess it’s better to lock in on gains once in a while and reinvest when it goes down.

Also there are lots of good ETF’s if you want to take the risk of investing in one country like India, China etc...

My personal favorites are

For India IFN and IIF (These are closed end funds. So look for premium on NAV. There are no index tracking funds for India as far as I know.)
For China FXI
For Brazil – EWZ

I am nervous to look beyond these 3 countries. In fact even with these 3 countries timing has to be correct if you want to reap the benefits. But if you are daring enough there is an ETF available for almost all developing and developed nations (Ishares web site is a place to start. http://www.ishares.com ). Good Luck with emerging markets.

Any other recommendations/advice are welcome.