The upside in emerging markets has been hard to come by these days amid the Covid-19 pandemic. However, the tide could be turning according to the latest technical moves from one particular exchange-traded fund (ETF).
One fund that’s showing technical bullish signs is the SPDR Portfolio Emerging Markets ETF (SPEM). SPEM seeks investment results that, before fees and expenses, correspond generally to the total return performance of the S&P Emerging BMI Index.
The fund generally invests substantially all, but at least 80%, of its total assets in the securities comprising the index and in depositary receipts based on securities comprising the index. The index is a market capitalization weighted index designed to define and measure the investable universe of publicly traded companies domiciled in emerging markets.
SPEM’s 200-day moving average could portend to more upside for EM. Its movements moving forward will hinge upon what the indicator does for the rest of 2020.
“Active traders who look to broaden their portfolio’s international exposure often turn to ETFs that track niche segments such as the emerging markets,” an Investopedia article noted. “As you can see from the chart of the SPDR Portfolio Emerging Markets ETF (SPEM), this group could be of specific interest to traders over the months ahead because the price has recently risen above the resistance of its 200-day moving average and has started an interesting move upward. The retest of the 200-day moving average back in June is of specific interest to followers of technical analysis because it signals that the bulls are in control of the momentum and that the long-term trend is likely to shift upward.”
EM Currency Hedging Built Into One ETF
While investors can utilize a plethora of currency hedging techniques, one way to do so without overcomplicating the process is via currency-hedged ETFs. One fund that hedges against EM countries like Brazil is the Xtrackers MSCI Emerging Markets Hedged Equity ETF (DBEM ).
DBEM seeks investment results that correspond generally to the performance of the MSCI EM US Dollar Hedged Index. The fund, using a “passive” or indexing investment approach, seeks investment results that correspond generally to the performance, before fees and expenses, of the underlying index, which is designed to track emerging market performance while mitigating exposure to fluctuations between the value of the U.S. dollar and the currencies of the countries included in the underlying index. It will invest at least 80% of its total assets in component securities of the underlying index.