Money has been flowing out of the international markets as of late. But it’s not the fact that dollars are being redeemed from international exchange-traded funds that should make people concerned. In fact, the most money came out of iShares MSCI Japan (EWJ),with $227 million pulled out.
However, only that $227 million only represents 1.6% of EWJ’s assets. The fact that emerging market funds witnessed large percentage redemptions is of greater concern. The iShares MSCI Brazil (EWZ) exchange-traded fund witnessed nearly 7% of its assets pulled ($184 million).
A contrarian would be quick to note that those who are running for the hills may be passing up the golden opportunity to get into the emerging BRIC markets (Brazil, Russia, China, India.)
The Claymore BRIC ETF, ticker symbol EEB, tracks the performance of American Depository Receipts from Brazil, Russia, India and China. And while emerging markets took a whopper of a hit over the last few weeks, with a top-to-bottom decline of 12.5% for EEB, its quick recovery puts it only 8% away from all-time highs.
Time to buy? Only if you have a firm idea of when to sell. The idea of buying and holding the BRIC Emerging Markets is about as sound as hoping Buy.com will make you a millionaire overnight.
Consider an entry point, but recognize the need to put a stop-loss on your position.
Disclosure statement: Some of Pacific Park’s investment clients may hold positions in any of the investments mentioned above.