Emerging Market ETFs

[g3org3y]

Anyone invested in Emerging Markets?

New tax year so ISA top up day. Wondering whether it's worth chucking some money into these versus further top ups of World ETF.

[Derek Chevalier]

g3org3y said:

Anyone invested in Emerging Markets?

New tax year so ISA top up day. Wondering whether it's worth chucking some money into these versus further top ups of World ETF.

Emerging markets make up around 12-13% of global market cap, so I would assume many would have exposure by default.

[g3org3y]

Derek Chevalier said:

Emerging markets make up around 12-13% of global market cap, so I would assume many would have exposure by default.

Yes, my world ETF (iShares MSCI ACWI UCITS ETF), states there is Emerging Market exposure in there.

iShares said:

The Fund seeks to track the performance of an index composed of companies from both developed and emerging markets countries worldwide

Is it worth having additional exposure with a specific ETF?

[NowWatchThisDrive]

g3org3y said:

Is it worth having additional exposure with a specific ETF?

Do you have a strong conviction that emerging markets are going to outperform?

[Derek Chevalier]

iShares said:

The Fund seeks to track the performance of an index composed of companies from both developed and emerging markets countries worldwide

Is it worth having additional exposure with a specific ETF?

Interesting question:

1. How much tracking error (how much your EM potentially underperforms the rest of your portfolio) are you prepared to accept, even if the EM does give you potentially greater returns in the long term? Can you cope with the potential larger drawdowns?
2. EM has historically tended to give greater returns (but having to accept more volatility) - however, this is sensitive to dates that you measure from and to.
3. Are you buying planning on buying broad EM exposure, or taking factor tilts - see comment below*.


This is worth a listen/read

https://www.youtube.com/watch?v=WtwLdbIyNVM
https://rationalreminder.ca/podcast/191

• "Interestingly, the premiums in emerging markets have shown up recently when value died in the last 20 years in the United States, value in emerging markets was doing just fine. "

"But over the same period, emerging markets value has beaten the emerging markets index by 1.91% per year. And it's beaten the US equity market by 2.77% per year over that same 20-year period. And then, of course, other factors like company size and profitability, they have also had positive premiums in emerging markets. So emerging markets are volatile, but they do offer diversification to a developed markets portfolio. "


And also Tim Hale's book -Smarter investing (he sees EM as a "returns enhancer" (along with small cap and value))

https://www.amazon.co.uk/Smarter-Investing-3rd-edn...

[xeny]

Derek Chevalier said:

2. EM has historically tended to give greater returns (but having to accept more volatility) - however, this is sensitive to dates that you measure from and to.

I've seen (but can't quickly find) a graph of I think CAPE for EM vs SP500 over time. That suggested that relatively speaking SP500 was very expensive in comparison to EM at present, so you could argue this is a good date from which to hope for a period of greater EM returns?

[Derek Chevalier]

xeny said:

Derek Chevalier said:

2. EM has historically tended to give greater returns (but having to accept more volatility) - however, this is sensitive to dates that you measure from and to.

I've seen (but can't quickly find) a graph of I think CAPE for EM vs SP500 over time. That suggested that relatively speaking SP500 was very expensive in comparison to EM at present, so you could argue this is a good date from which to hope for a period of greater EM returns?

If you look at the various US valuations, how much of the S&P 500 CAPE "overvaluation" is due to large-cap growth (on a PE of 26.8) vs the "average" 17.9 for the mid blend (average?).

Page 13

https://am.jpmorgan.com/us/en/asset-management/adv...

Strip out the large-cap growth and I wonder what the CAPE of the S&P would be then.

At the end of 2021, the Russell 2000 growth CAPE was 53 vs value equivalent of 23.

https://siblisresearch.com/data/growth-value-pe-ca...

Maybe it's not an S&P 500 vs EM question, but an S&P/US large growth vs most other things.....

[g3org3y]

Thanks for the replies, will have a look at the links.

[leef44]

g3org3y said:

Derek Chevalier said:

Emerging markets make up around 12-13% of global market cap, so I would assume many would have exposure by default.

Yes, my world ETF (iShares MSCI ACWI UCITS ETF), states there is Emerging Market exposure in there.

iShares said:

The Fund seeks to track the performance of an index composed of companies from both developed and emerging markets countries worldwide

Is it worth having additional exposure with a specific ETF?

I thought I would set up an iShare MSCI global share ETF but don't see how one invests if you are not US citizen. I wanted to set up a GIA then annually transfer funds to the same funds in an ISA.

How do you go about investing in iShare? I can't see a channel to do this unless you are a US citizen.

As to your question, yes I do spread some of my investments in Emerging markets over and above the global trackers just to dilute the US bias.

[xeny]

Can't you access https://www.google.com/finance/quote/EMIM:LON on your platform?

[leef44]

xeny said:

Can't you access https://www.google.com/finance/quote/EMIM:LON on your platform?

I can get to that on Hargreaves Lansdown but I can't get the MSCI global tracker. I was trying to reduce my management fees by going to iShare instead of HL but don't know how to invest in iShare.

[NowWatchThisDrive]

leef44 said:

I can get to that on Hargreaves Lansdown but I can't get the MSCI global tracker. I was trying to reduce my management fees by going to iShare instead of HL but don't know how to invest in iShare.

You can't invest through iShares (BlackRock) directly the same way you can Vanguard.

[leef44]

NowWatchThisDrive said:

leef44 said:

I can get to that on Hargreaves Lansdown but I can't get the MSCI global tracker. I was trying to reduce my management fees by going to iShare instead of HL but don't know how to invest in iShare.

You can't invest through iShares (BlackRock) directly the same way you can Vanguard.

Sorry to go off topic on this thread. I registered with BlackRock today and can't see how you invest in it. It just gives me access to view funds but no means to make an application to buy/invest in funds.

To view the global tracker fund it redirects to iShare website where there is a link for "How to buy ETF" which then sends you back to the BlackRock page.

What am I missing?

https://www.blackrock.com/uk

[NowWatchThisDrive]

leef44 said:

NowWatchThisDrive said:

leef44 said:

I can get to that on Hargreaves Lansdown but I can't get the MSCI global tracker. I was trying to reduce my management fees by going to iShare instead of HL but don't know how to invest in iShare.

You can't invest through iShares (BlackRock) directly the same way you can Vanguard.

Sorry to go off topic on this thread. I registered with BlackRock today and can't see how you invest in it. It just gives me access to view funds but no means to make an application to buy/invest in funds.

To view the global tracker fund it redirects to iShare website where there is a link for "How to buy ETF" which then sends you back to the BlackRock page.

What am I missing?

https://www.blackrock.com/uk

BlackRock issues ETFs under its iShares brand, but I'm pretty sure you can't buy/sell them directly through BlackRock. You'd have to buy them through your broker (Hargreaves Lansdown or whoever you're with).

[leef44]

NowWatchThisDrive said:

BlackRock issues ETFs under its iShares brand, but I'm pretty sure you can't buy/sell them directly through BlackRock. You'd have to buy them through your broker (Hargreaves Lansdown or whoever you're with).

Thanks, I was hoping to buy global tracker which doesn't seem to be available from HL (perhaps is only available in US)

https://www.ishares.com/uk/individual/en/products/...

but the MSCI EM IMI which is linked in a previous post is available.