Tuesday, October 4, 2011

Q3 Results for EEM2

Near the beginning of the year, CCI was looking for ways to more globally diversify the portfolio.  I described a portfolio of three ETFs that I felt would diversify away from the US markets but have less risk than choosing a popular emerging market ETF such as  VWO or EEM .   A portfolio of 3 small cap, international ETFS all of which focus on the emerging consumer while trying to be less dependent on China than standard emerging market etfs was developed.  The portfolio, called EEM2, is described in the article here.   It consists of a wide ranging emerging consumer etf econ and small cap etfs for Brazil brf and India scin .

Diversifying away from the US to emerging markets around the beginning of the year was a bad idea.  The emerging market etf VWO is down 25.6% this year.   Far worse than the US market.  The Chinees ETF fxi is down more, about 27.3% including dividends.  EEM2 performance was similar, but better. Down 24%. 
The performance of the Brazil and India etfs were both large drags on performance, both down well over 30%. Econ performed better (less bad) and CCI still likes the make-up of the fund.  It seems to put a focus on companies that might serve the emerging middle class in a wide variety of countries.   CCI plans to stick with this portfolio for now.  However, it is possible that we may add to the ECON position and close the Brazil and India portions for tax losses in q4.

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