Guggenheim BRIC ETF (EEB) has combined four single-country markets into one handy ETF. It has become popular for those perhaps unable to buy all four individual country funds or for those that find it more difficult to cherry-pick one or two for inclusion in their portfolios.
Brazil, Russia, India and China have been the power houses of new economic growth among developing markets. It would be difficult to consider these countries as “emerging markets” since, for example, China is now the world’s third largest economy.
At the same time it’s impossible for these high growing economies to avoid the pitfalls of any market. These often include inflation issues. Both Brazil and India, for example, are battling high, single-digit inflation and are wrestling with ways to tame it that can negatively impact equity-market appreciation.
China also has had inflation issues, which it has tried to contain but recently has given more accommodation by lowering bank-reserve requirements to stimulate more economic growth. Russian markets are very much tied to volatility, descending commodity markets and recent political instability. So investing in these markets hasn’t been very rewarding in 2012, as most of them have fallen 20%-30% from recent highs in March.
Assembling (EEB) takes some ingenuity as it’s far from equally balanced in country allocation as noted below, as of March 31:
- Brazil 54.56 %
- China 18.46 %
- HongKong 13.61 %
- India 11.23 %
- Russia 2.15 %
This imbalance is primarily due to market-capitalization issues and relative market depth. But potential investors should be aware of specific country allocation and not assume that the constituent countries are evenly allocated.
Top fund sector exposure for EEB is below, as of March 31:
- Energy 25.28 %
- Financials 16.81 %
- Telecommunication Services 14.57 %
- Materials 14.28 %
- Information Technology 9.42 %
- Consumer Staples 8.94 %
- Consumer Discretionary 3.94 %
- Utilities 3.75 %
- Industrials 1.65 %
- Health Care 1.37 %
Below is a monthly chart of (EEB). Annotations within the chart include general advice for most investors to remain on the right side of the 12-period moving average (MA).
disclosure : The ETF Digest has no current position in EEB.