 |
Vanguard ETF: |  |
7.4%* |
|
Diversified Core: | |
8.1%* |
|
Six Core Asset ETFs: | |
7.3%* |
Articles on EWX
- WisdomTree Emerging Market Small Cap ETF Enables Diversification
06/16/2011
Emerging market stocks have been recognized as an important asset class for diversification purpose for a long term retirement investing portfolio. Small company stocks in emerging economies offer even higher growth in this asset class. The small cap shares are usually those which have relatively small market capitalization usually ranging between $ 300 million to $ 2 billion.
It is thus important to study these ETFs more carefully before investing. In this article, we present more detailed study on WisdomTree Emerging Market ETF (DGS).The following table lists three most liquid small cap ETFs in this asset class.
Emerging Market Small Cap
06/10/2011
Description Symbol 1 Yr 3 Yr 5 Yr Avg. Volume(K) 1 Yr Sharpe SPDR S&P Emerging Markets Small EWX 18.27% 3.74% NA 119 104.22% Wisdomtree Emerging Mkts Small DGS 33.94% 11.31% NA 129 166.6% Guggenheim Frontier Markets FRN 19.43% NA NA 72 108.31%
For information on more ETF performance, please refer to here.From the above table clearly DGS is leading the other in terms of longevity and in terms of returns of one year. Compared with broad base emerging market index ETF (DGS), its three year annualized return 11.31% is way above the EEM's annualized return (about 0%). The inception date of the fund is 8/1/2007. 64% of the fund iin small cap shares.
DGS has also a unique diversification in the emerging market. Please see the following table for its holding percentages among countries as of 6/06/2011.
1. Taiwan
20.97%
2. South Korea
11.24%
3. South Africa
9.65%
4. Thailand
9.61%
5. Brazil
8.95%
6. Israel
7.21%
7. Turkey
6.88%
8. Malaysia
5.31%
9. China
5.00%
10. Chile
4.17%
11. Philippines
3.18%
12. Indonesia
2.34%
13. Mexico
2.25%
14. India
1.25%
15. Poland
0.52%
16. Argentina
0.33%
17. United States
0.15%
Please also find below the sector wise diversification of DGS as on 06-06-2011.
Sector
Weight
1. Industrials
21.40%
2. Financials
18.47%
3. Consumer Discretionary
16.38%
4. Information Technology
11.54%
5. Materials
10.19%
6. Consumer Staples
7.71%
7. Utilities
6.67%
8. Health Care
2.95%
9. Energy
2.38%
10. Other
2.08%
One of the biggest advantages of investing in small-cap stocks is to exploit market inefficiency: the opportunity to beat institutional investors.Many small cap companies are not well researched. This is more true for emerging market small companies. Since DGS offers a systematic way to invest in a broad basket of small compaines in these regions, it is an effective to gain exposure in this important asset class and derive higher returns.
Disclaimer: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical
Symbols: EEM, DGS, FRN, EWX, VWO, ETFs, Asset Allocation
Exchange Tickers: (EEM), (DGS), (FRN), (EWX), (VWO)
- Emerging Market Small Cap: An investment with High Risk But Rapid Returns
05/05/2011
Emerging markets operate new environments, with new challenges and unique models for investment. Despite the risk and the toughness, emerging markets have an interesting potential to grow rapidly. Small Cap emerging market funds are going to be the some of the fastest growing but potentially most volatile of the emerging market alternatives.
Emerging Market Small Cap
04/29/2011
Description
Symbol
1 Yr
3 Yr
5 Yr
Avg. Volume(K)
1 Yr Sharpe
Wisdomtree Emerging Mkts Small
27.65%
11.91%
NA
179
121.55%
Guggenheim Frontier Markets
15.44%
NA
NA
139
77.14%
SPDR S&P Emerging Markets Small
11.76%
NA
NA
141
57.65%
Wisdomtree Emerging Mkts Small (DGS) has this time a strong returns, investing the major part of the fund in the Industrial, Financial, and Consumer Discretionary Sector (22%, 28% and 17.5%, respectively). This fund invest mostly in Taiwan, Korea, South Africa and Thailand.
Following, the Guggenheim Frontier Markets ETF (FRN), which 80% of the assets of the fund is invested in American depositary receipts ("ADRs") and global depositary receipts ("GDRs"). The investments are made in what is called “Frontier Markets”, with the participation of developing markets such as Chile, Colombia and Egypt.
Finally, SPDR S&P Emerging Markets Small Cap (EWX) has the lowest figures among the three showed. This fund invest in Emerging Markets included in the S&P Global BMI Index, tracking all the stocks in developed and emerging markets with float-adjusted market capitalization of at least $100 million.
Major Asset Classes Trend
04/29/2011
Description
Symbol
1 Week
4 Weeks
13 Weeks
26 Weeks
52 Weeks
Trend Score
Gold
3.84%
9.46%
16.96%
14.89%
32.08%
15.45%
Commodities
0.6%
3.84%
13.56%
26.69%
30.52%
15.04%
US Equity REITs
3.07%
5.58%
10.39%
15.42%
22.62%
11.42%
International REITs
2.78%
5.26%
8.35%
10.35%
28.26%
11.0%
US Stocks
2.01%
2.4%
7.85%
18.72%
19.58%
10.11%
Emerging Market Stks
-0.22%
1.71%
9.98%
12.03%
24.84%
9.67%
International Developed Stks
2.24%
4.63%
7.69%
12.36%
17.73%
8.93%
International Treasury Bonds
2.13%
4.92%
7.23%
4.15%
15.65%
6.82%
US High Yield Bonds
0.47%
1.72%
3.59%
7.88%
14.77%
5.68%
Frontier Market Stks
1.76%
3.07%
4.61%
-2.58%
16.42%
4.66%
US Credit Bonds
0.82%
1.63%
2.31%
0.68%
6.89%
2.47%
Emerging Mkt Bonds
0.75%
1.2%
3.07%
-2.83%
8.87%
2.21%
Mortgage Back Bonds
0.71%
1.15%
1.49%
0.91%
4.89%
1.83%
Total US Bonds
0.65%
1.34%
1.47%
-0.02%
5.4%
1.77%
Intermediate Treasuries
1.08%
1.62%
1.07%
-2.91%
7.4%
1.65%
Municipal Bonds
0.98%
2.22%
3.32%
-1.75%
1.43%
1.24%
Treasury Bills
-0.01%
0.03%
0.08%
0.1%
0.17%
0.07%
Analyzing the major assets class trend, it can be seen that the stocks in the Emerging Markets (VWO)have an interesting trend score, taking a strong position in the middle top table, with figures closer to the US Stocks (VTI).
Emerging Markets Small Capitalization represent a good investment for those who do not have problems on risking some money in the short term, and are willing to produce high yields taking into account a smaller period of time.
Symbols: DGS, FRN, EWX, VTI, VWO
Exchange Tickers: (NYSE: DGS), (NYSE: FRN), (NYSE: EWX), (NYSE: VTI), (NYSE: VWO)
Disclaimer: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.
- Emerging Market Small Cap ETFs Show Promising Growth as Investors Look to Diversify
05/05/2011
As the international economy has become more intertwined, many investors have sought out exposure to a wider range of geographic markets. Emerging Market Small Cap ETFs provide investors access to growing companies in the world's growing economies. While emerging market investments come with inherent risks, they also come with more upside potential, as companies in these markets often have more room for growth than firms in more developed nations.
In recent periods, capital inflows to developing economies have increased as investors move away from established economies that have encountered economic difficulty or low growth levels. This reallocation of capital has resulted in strong growth for ETFs that track Emerging Market Small-Cap Equities. Among these ETFs, the Wisdomtree Emerging Markets Small Cap ETF (DGS) has lead the way, returning 27.65% in the past year. Other high level performers include the Guggenheim Frontier Markets (FRN) and the SPDR S&P Emerging Markets Small Cap ETF (EWX), offering investors returns of 15.44% and 11.76% respectively.
Emerging Market Small Cap
4/29/2011
Description Symbol 1 Year Average Volume (K) Wisdomtree Emerging Mkts Small DGS 27.65% 179 Guggenheim Frontier Markets FRN 15.44% 139 SPDR S&P Emerging Markets Small EWX 11.76% 141 As mentioned, the most successful ETF in the class in the past year has been Wisdomtree's Emerging Markets Small Cap ETF (DGS). This ETF seeks to track the price and yield performance of the Wisdomtree Emerging Markets Small Cap Dividend Index and attempts to invest all of its assets in the stocks that make up the index. DGS is well diversified across numerous sectors. Below are the sectors making up over 10% of the total weighting for the Wisdomtree's Emerging Markets Small Cap ETF (DGS):
- Industrials (19.94%)
- Consumer Cyclical (19.11%)
- Technology (14.36%)
- Financial Services (12.72%)
- Basic Materials (10.43%)
With the continued growth of many emerging economies, a strong argument can be made for investors to have a dedicated portion of their portfolios invested in Emerging Market Small Cap ETFs. While these investments certainly come with risks, the potential reward should be enough to keep most investors on board.
Disclosure: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.
- Morningstar's 401K Clone Begs the Question- What about Managed Funds?
02/27/2011
We have already examined the Morningstar 401K plan. We explained why it is a model of plan creation - providing a manageable number of funds with broad asset class exposure that enables portfolios that can deliver solid returns. We also provided an ETF clone which enabled portfolios that underperformed the original.
Performance chart (as of Feb 25, 2011)
Performance table (as of Feb 25, 2011)
Portfolio Name
1Yr AR
1Yr Sharpe
3Yr AR
3Yr Sharpe
5Yr AR
5Yr Sharpe
Morningstar 401K ETF Clone Tactical Asset Allocation Moderate
15%
112%
8%
63%
11%
75%
Morningstar 401K ETF Clone Strategic Asset Allocation Moderate
17%
155%
3%
14%
6%
30%
Morningstar Inc 401K Plan Tactical Asset Allocation Moderate
22%
168%
13%
121%
14%
125%
Morningstar Inc 401K Plan Strategic Asset Allocation Moderate
15%
178%
3%
22%
5%
35%
The chart is a little misleading as the ETF Clone has fewer choices until recently because of the newness of the ETF funds. If we look at the table and consider just the five year return figures we can see that the strategic asset allocation returns are similar but there is an additional 3% garnered from the original.
This has prompted further analysis of the funds which we present here.
We tracked returns for all of the funds used in each portfolio over 5, 3 and 1 years. Some of the ETFs are sufficiently new that there wasn't five year data. We then created a score which was the summation of the five year number multiplied by three, the three year number multiplied by 1.5 and the one year number.
Name
5 year AR (%)
3 year AR (%)
1 year AR (%)
ETF Score
Mu Fund Score
PowerShares DB Commodity Index Tracking
5.97
(4.76)
20.50
31%
PIMCO Commodity Real Ret Strat Instl
2.32
(8.45)
20.85
15%
SPDR S&P Emerging Markets Small Cap
8.69
(0.04)
18.93
45%
American Funds New World A
8.29
(0.21)
17.00
42%
Oppenheimer Developing Markets Y
(2.86)
(7.95)
25.22
5%
Vanguard Emerging Markets Stock ETF
17.45
17%
SPDR Barclays Capital High Yield Bond
4.15
6.89
11.89
35%
PIMCO High Yield Instl
5.51
6.10
7.11
33%
PIMCO Real Return Instl
5.40
4.34
5.44
28%
iShares Barclays TIPS Bond
4.10
2.46
4.06
20%
iShares Barclays Aggregate Bond
5.28
5.05
3.76
27%
PIMCO Total Return Instl
8.07
8.64
6.61
44%
iShares Barclays Interm Govt/Credit Bond
3.12
2.53
7%
Loomis Sayles Bond Instl
6.35
4.82
8.32
35%
STABLEVALUE
3.96
3.07
(0.21)
16%
iShares Barclays 1-3 Year Treasury Bond
3.65
1.99
1.07
15%
Vanguard Short-Term Bond ETF
1.08
0.90
3%
Vanguard Short-Term Bond Index Inv
4.36
2.87
0.10
17%
Vanguard Europe Pacific ETF
(2.68)
17.45
13%
Vanguard International Growth Adm
4.04
(1.26)
21.65
32%
iShares MSCI EAFE Value Index
(0.66)
(4.69)
12.77
4%
TweedyBrowne Global Value
2.87
1.38
13.75
24%
Morgan Stanley Real Estate I
2.55
2.13
34.01
45%
Vanguard REIT Index ETF
2.09
2.26
33.32
43%
Fidelity Select Brokerage & Invmt Mgmt
(1.09)
(1.28)
15.23
10%
Financial Select Sector SPDR
(10.63)
(12.91)
15.61
-36%
iShares Russell 3000 Index
1.91
1.28
21.97
30%
Oakmark I
4.75
5.85
17.86
41%
Selected American Shares S
1.35
(1.68)
15.91
17%
Vanguard Dividend Appreciation ETF
3.37
18.54
24%
Vanguard Institutional Index Instl
2.11
0.16
19.63
26%
Vanguard Total Stock Market ETF
2.57
1.55
23.38
33%
Calvert Social Index I
1.71
1.66
23.25
31%
Harbor Capital Appreciation Instl
3.15
4.35
20.33
36%
Vanguard Mega Cap 300 Gr Index ETF
3.25
23.65
29%
Vanguard Growth ETF
3.25
2.33
22.48
36%
American Funds Washington Mutual R5
1.68
(1.10)
16.74
20%
Vanguard Value ETF
2.03
(0.60)
19.16
24%
Brandywine
1.16
(3.55)
36.42
35%
iShares Russell Midcap Growth Index
4.55
5.27
38.04
60%
PRIMECAP Odyssey Aggressive Growth
6.64
9.56
18.72
53%
Vanguard Mid-Cap Growth ETF
3.45
36.71
42%
Vanguard Selected Value Inv
4.65
4.17
23.07
43%
Vanguard Mid-Cap Value ETF
3.77
23.68
29%
iShares S&P Moderate Allocation
9.73
10%
Vanguard STAR Inv
3.61
2.57
12.85
28%
T. Rowe Price Small-Cap Stock
5.52
10.67
38.04
71%
Vanguard Small Cap ETF
4.14
6.49
31.92
54%
Allianz NFJ Small Cap Value Instl
6.67
5.67
28.03
57%
Vanguard Small Cap Value ETF
2.50
4.42
25.69
40%
Instead of looking at each fund individually, we added the scores in each of the major asset classes together:
Asset Class
ETF Score
Mutual Fund Score
MF/ETF
Delta
US Equities
4.20
4.22
0%
International Equities
0.17
0.56
228%
Emerging Markets
0.62
0.46
-26%
Real Estate
0.43
0.45
4%
Commodities
0.31
0.15
-52%
Fixed Income
1.07
1.73
62%
This gives us some insight on the different portfolios.
- US equity returns are running neck and neck - indicating that to improve the returns of the ETF portfolio, looking at the US equities should only be undertaken when the other asset classes have been examined
- There is a significant gap in the international equities. The Vanguard Europe Pacific ETF looks like it will help but this is an area for shoring up the ETF portfolio
- The Emerging Market ETF outperforms the original so, while it may be better to improve performance, that is a secondary task
- Real estate runs neck and neck so look at that later
- Commodities, the ETFs are running ahead so, again, we can look at that later
- Fixed income is probably the biggest area where the difference is explained. It is the largest single asset category in terms of funds invested (in most cases) and there is a significant difference between the two. The original plan has two of the leading managed fixed income funds which shows consistently higher performance.
The takeaway is that to look to improve returns from the Clone ETF, focus needs to be applied on international and fixed income asset classes.
As we go through this exercise, this will bring to the fore a elephant in the ETF space - are there times when managed funds do outperform indexed funds - intuitively it would seem so and fixed income in this market seems to suggest itself as a prime example.
We will examine this deeper in an upcoming article
Disclosure:
MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.
Symbols:DBC,PCRIX,EWX,NEWFX,ODVYX,VWO,JNK,PHIYX,PRRIX,TIP,AGG,PTTRX,GVI,LSBDX,PRWBX,SHY,BSV,VBISX,VEA,VWILX,EFV,TBGVX,REFDX,VNQ,FSLBX,XLF,IWV,OAKMX,SLASX,VIG,VINIX,VTI,CISIX,HACAX,MGK,VUG,RWMFX,VTV,BRWIX,IWP,POAGX,VOT,VASVX,VOE,AOM,VGSTX,OTCFX,VB,PSVIX,VBR,
