ETFdb.com analyzes the search patterns of our visitors each week. By sharing these trends with our readers, we hope to provide insights into what the financial world is concerned about and how to position your portfolio.
Volatility in the emerging markets has been the central theme this week. Russia, Brazil and the Chinese yuan grabbed the first three spots on our list, all for vastly different reasons. Meanwhile, silver miners are present for the second consecutive week in our popularity contest. India has also made it to the top five, but with only a slight increase in traffic.
Russia: Unscathed From a Failed Meeting
In all likelihood, all eyes this week were on the meeting of OPEC members and Russia, who descended on Doha last Sunday in an attempt to reach a deal on cutting oil output. Although the sides failed to find common ground because of Saudi Arabia’s insistence that Iran take part in the accord, oil prices stood firm, likely making Russian ETFs an attractive investment. Indeed, viewership of our Russia ETFs page has increased nearly 103% week over week, as several ETFs focused on Russian equities reached fresh year-to-date highs on Wednesday. For instance, the Market Vectors Russia ETF (RSX ) has risen 3% since last Wednesday, extending year-to-date gains to more than 20%.
The strong performance of Russia ETFs since the beginning of the year has left many in the investing community befuddled, particularly given oil’s nosedive. While crude prices have tumbled nearly 10% year to date, RSX, the largest Russia ETF, has jumped almost 24% over the same period. Interestingly, RSX has 34% exposure to the energy sector and 17% to basic materials, another industry that has suffered lately.
Several factors have converged to make Russian equities one of the best-performing asset classes. In the past two years, a perfect storm of events – starting with sanctions from the European Union and ending with crude’s drop – prompted significant outflows from the Russian stock market and the ETFs mirroring its performance. At some point during last summer, RSX was underperforming crude as investors feared the worst.
But the sell-off proved overblown. Although the Russian economy is not in its best shape, it has largely succeeded at withstanding the external shocks in part thanks to the central banks’ audacity and its dollar reserves accumulated during periods of current account surpluses. The reserves, which fell dramatically during 2014 and 2015, started to rise again this year. All these developments have helped to prop equities, which are still trading at very low multiples, likely making them an attractive investment or trade, particularly if oil prices start to rise.
Brazil: Impeach Me If You Can
Our Brazil ETFs page has taken the second spot in our weekly top visited pages. And that’s hardly surprising given that the country has made headlines over the few past days with President Dilma Rousseff losing a key vote in the lower house of Congress on Sunday over her impeachment. Now, if the Senate votes for her impeachment as well, she will be forced to leave the post. The markets were on the fence upon learning of the news, but visitors still flocked in great numbers to our page. Week over week, the viewership of our Brazil ETFs page grew by about 98%, close behind Russia. The Brazil Index MSCI iShares ETF (EWZ ) posted flat gains since the impeachment vote on Sunday until Thursday, but the broad index rose slightly over the same period. Still, year-to-date performance of the index has been stellar despite the political turmoil and crude’s decline. EWZ, for example, has jumped 38% since the beginning of the year, trumping gains of Russia’s RSX.
But as in the case with Russia ETFs, the rally is more of a rebound from very low levels than a change of perception about the country’s prospects. EWZ remains down nearly 18% over the past 12 months.
Chinese Yuan: Advancing Tepidly
Our Chinese yuan page, tracking ETFs with exposure to the Chinese currency, saw its traffic increase over 86% week over week for no obvious reasons. There aren’t many investment products offering exposure to the renminbi, but the three that do have not been very volatile lately. True, currency markets are inherently less explosive than other asset classes.
The yuan has been on a slight uptrend year to date as the currency has been attempting to stage a recovery from the dramatic fallout last summer. Since the beginning of the year, the S&P Chinese Renminbi Total Return Index ETF (CNY ) has risen nearly 2%, but the small recovery has not been enough for the fund to reclaim its lost ground in August.
Silver Miners: Buying Like There’s No Tomorrow
Silver miners ETFs have continued their upward trend over the past week as silver prices reached a 10-month high on Tuesday. The dramatic rebound has attracted visitors to our page covering silver miners, which saw its traffic rise 48% week over week. It is important to note that silver miners have made our list for the second consecutive week, dropping a level from third place last Thursday.
The iShares MSCI Global Silver Miners ETF (SLVP ) has risen an impressive 11% since last Thursday, reaching a two-year high on Wednesday. Since the start of the year, SLVP has jumped nearly 90%, making it one of the best-performing ETFs in the space.
If history is any guide, silver prices have further room to rise in order to catch up with the performance of its shinier relative gold. Last week, silver made some progress toward that end, bringing the gold/silver price ratio to 75 from as much as 83 in March.
India: Waiting to Take off
As part of the emerging-markets asset class, India attracted interest from our readers last week. However, our page covering ETFs with exposure to the Indian stock market saw only a small week-over-week rise of 10%. The iShares MSCI India ETF (INDA ) has increased less than 1% since last Thursday, bringing its year-to-date performance slightly in the black.
But India may attract investors not just for its current performance but for the potential gains it could provide in the future as the country is proceeding with its reforms. Indian ETFs are all the more attractive given that they have largely missed the year-to-date emerging markets rally.
The Bottom Line
Emerging markets have been on investors’ minds this week, with Russia, Brazil and India all making it to our list. Including China, represented by the Chinese yuan, it can be said that the much-touted acronym, BRIC, has dominated our popularity contest this week. Silver miner ETFs rightfully took the fourth spot for their outstanding year-to-date performance.
By analyzing how you, our valued readers, search our property each week, we hope to uncover important trends that will help you understand how the market is behaving so you can fine-tune your investment strategy. At the end of the week, we’ll share these trends, giving you better insight into the relevant market events that will allow you to make more valuable decisions for your portfolio.