BlackRock: Seek Opportunities Abroad

"It was the best of times, it was the worst of times..."

--Charles Dickens

A Tale of Two Cities indeed. Emerging markets and the S&P 500 are producing very different results for investors this year. One is up and one is down -- curiously, both by the same amount.

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Investors bailing on broken momentum sectors like biotechnology and social media are rotating their exposure overseas. Their buying this month has propelled emerging stock and bond exchange-traded funds to the top of the list as fastest growing funds. The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB ) ranks first, followed by the iShares MSCI Emerging Markets ETF (EEM ).

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BlackRock, Inc. Chief Investment Strategist Russ Koesterich tell clients to seek opportunity abroad. Emerging markets have just joined what BlackRock calls "The List," a targeted selection of new opportunities sent weekly to clients. This morning on Surveillance he explained why:

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Russ cautions "dispersions vary between countries and currencies." He also advises clients to focus on those emerging market companies which pay dividends, thereby smoothing cross-border volatility. We think of this as getting paid to wait.

For investors who agree, iShares (owned by BlackRock) offers the iShares Emerging Markets Dividend ETF (DVYE ). It pays a 4.6 percent dividend, supported primarily by investments in telecom, electricity generation, real estate and chemicals. Taiwan, Brazil and South Africa account for about half of total exposure.

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