Emerging Markets
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Introduction
Emerging market[1] equities are sometimes purchased by Canadians to provide portfolio diversification. International equities, in traditional definitions, are all equities outside the US, or North America. The definition of global equities includes US stocks. This section will consider emerging markets. US equities and international equities are considered in separate sections.
Emerging markets are generally considered to have higher risk than developed country markets.
Emerging markets equities are often benchmarked against the MSCI Emerging Markets Index ("MSCI EM").[2] which covers equity indices from 23 countries comprising Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.[3]
Mutual Funds and ETFs
Some actively managed Canadian mutual funds are available that allow Canadians to purchase emerging markets equities.[4] Passively managed index funds or ETFs are also available.[5] Major US ETF vendors such as BlackRock and Vanguard offer ETFs that cover not only the MSCI EM but regional or country-specific indexes. An MSCI EM ETF with the symbol VWO is available from Vanguard. An alternative is iShares EEM ETF. This ETF is also available from BlackRock as MSCI Emerging Markets Index Fund, TSX symbol XEM. A more recent entrant to the Canadian market, in late 2011, is Vanguard Canada and the MSCI Emerging Markets Index ETF (CAD-Hedged), TSX symbol VEE. Canadian investors can access US ETFs through their discount brokers, but face currency costs unless the ETFs are held in a US-dollar account.
One popular emerging markets subcategory involves investing in Brazil, Russia, India, and China. These four countries are collectively referred to as the BRIC countries. BRIC ETFs are available from several suppliers, including CBQ, from Claymore Investments.
References
- ↑ Wikipedia Emerging Markets, viewed March 13, 2009
- ↑ Investopedia, MSCI Emerging Markets Index, viewed March 12, 2009,
- ↑ MSCI Barra EM Index definition, viewed March 13, 2009
- ↑ Globefilter. Emerging Markets, viewed March 13, 2009.
- ↑ Ibid.
