What an interesting week for global stocks and Emerging Markets. The levels of volatility jumped significantly with the VIX Index reading increased by more than 78% for the week!
Both Emerging and Frontier Markets lost around 6% predominantly due to plummeting oil and generally commodity prices. Technically things look awful as both EEM and FM ETFs continue trading in both negative trend and momentum.
Last week we recommended a minimum 70% cash allocation for Multi-Asset Global Emerging Market strategies in order to tackle the higher level of volatility and protect downside [Your Weekly Emerging & Frontier Market ETF Dashboard: Quantitative Asset Allocation (Iconographic)].
This week we recommend to maintain this cash level. Within the maximum 30% equity basket we advise to be smart and try to select both global EM thematic and country specific ETFs ideally trading in both positive trend and momentum in relation to the iShares MSCI EM ETF (EEM) or at least in positive momentum. Those positions should be scrutinized on a daily basis especially during the periods of increased volatility like now.
The below attached iconographic scrutinizes in details where the global Emerging Markets are at the moment (as of December, 12th) and how different global thematic and country specific ETFs compare against the iShares MSCI Emerging Market ETF (EEM).
In case of any question, please send me a message either via my email Contact(at)ETFalpha.uk or Twitter account @ETFalpha.
Important Information Related to this Article
Please familiarize yourself with our DISCLAIMERS every time you engage the site: they’re updated constantly without notice. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product. ETFalpha did not own any shares of the mentioned ETFs at the moment of writing this article.