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Global stock markets suffered historic losses in the first quarter of 2020 due to widespread coronavirus-induced selloffs. Markets saw a massive wipe out of $12 trillion. Oil slumped 60% due to a row between Saudi Arabia and Russia regarding the prolongation of the output cut as well as lacklustre demand. No wonder, emerging markets (EM) economies were dealt a heavy blow as well, especially with China being the epicenter of the disease.
The quarter saw strength in the greenback. Invesco DB US Dollar Index Bullish ETF (UUP - Free Report) gained about 4%, wreaking havoc on emerging market currencies. Brazil, Mexico and South Africa have seen their currencies plummet more than 20%, per Reuters. iShares MSCI Emerging Markets ETF (EEM - Free Report) lost 26.7% in the first quarter and WisdomTree Emerging Currency Strategy ETF (CEW - Free Report) retreated about 12.7% (read: U.S. Dollar Climbs: ETFs to Gain/Lose).
Against this backdrop, we highlight a few broader emerging market ETFs that emerged as the best and worst performers of the first quarter.
Toppers
ProShares Short Term USD Emerging Markets Bond ETF — Down 8.5%
The underlying DBIQ Short Duration Emerging Market Bond Index is composed of a diversified portfolio of USD-denominated emerging markets bonds that have less than five years remaining to maturity. The bonds are issued by emerging markets sovereign governments, non-sovereign government agencies and entities, and corporations with significant government ownership. It yields 3.58% annually.
SPDR DoubleLine Emerging Markets Fixed Income ETF (EMTL - Free Report) — Down 10.9%
This ETF is active and does not track a benchmark. Chile, Mexico, Panama, Colombia and Indonesia take about 60% of the fund. It yields 4.04% annually.
EMQQ The Emerging Markets Internet & Ecommerce ETF (EMQQ - Free Report) — Down 11.4%
The underlying EMQQ The Emerging Markets Internet & Ecommerce Index is designed to measure the performance of an investable universe of publicly-traded, emerging market internet and ecommerce companies. Tencent (9.08%), Alibaba (8.1%) and Naspers (7.3%) are the top three holdings of the fund.
Losers
Global X MSCI SuperDividend Emerging Markets ETF (SDEM - Free Report) — Down 34.9%
The underlying MSCI Emerging Markets Top 50 Dividend Index tracks the performance of 50 equally-weighted companies that rank among the highest dividend yielding equity securities in Emerging Markets. It yields 10.02% annually.
The underlying Cambria Emerging Shareholder Yield Index includes stocks in emerging market countries with high cash distribution characteristics. It yields 6.04% annually.
The underlying S-Network Emerging Sector Dividend Dogs Index selects five stocks in each of the ten GICS sectors that make up the S-Network Emerging Markets which offer the highest dividend yields as of the last trading day in November.
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Best & Worst Broader Emerging Market ETFs of Q1
Global stock markets suffered historic losses in the first quarter of 2020 due to widespread coronavirus-induced selloffs. Markets saw a massive wipe out of $12 trillion. Oil slumped 60% due to a row between Saudi Arabia and Russia regarding the prolongation of the output cut as well as lacklustre demand. No wonder, emerging markets (EM) economies were dealt a heavy blow as well, especially with China being the epicenter of the disease.
The quarter saw strength in the greenback. Invesco DB US Dollar Index Bullish ETF (UUP - Free Report) gained about 4%, wreaking havoc on emerging market currencies. Brazil, Mexico and South Africa have seen their currencies plummet more than 20%, per Reuters. iShares MSCI Emerging Markets ETF (EEM - Free Report) lost 26.7% in the first quarter and WisdomTree Emerging Currency Strategy ETF (CEW - Free Report) retreated about 12.7% (read: U.S. Dollar Climbs: ETFs to Gain/Lose).
In comparison, China stocks put up a fierce fight, having lost only 11% in dollar terms. But other major emerging economies suffered a great deal. iShares MSCI Brazil Capped ETF (EWZ - Free Report) and iShares India 50 ETF (INDY - Free Report) have lost 38% and 52% so far this year. Commodity price crash and rising bad-debt levels have prompted preventive stimulus measures across many countries (read: What Coronavirus? These China ETFs Gained Past Month).
Against this backdrop, we highlight a few broader emerging market ETFs that emerged as the best and worst performers of the first quarter.
Toppers
ProShares Short Term USD Emerging Markets Bond ETF — Down 8.5%
The underlying DBIQ Short Duration Emerging Market Bond Index is composed of a diversified portfolio of USD-denominated emerging markets bonds that have less than five years remaining to maturity. The bonds are issued by emerging markets sovereign governments, non-sovereign government agencies and entities, and corporations with significant government ownership. It yields 3.58% annually.
SPDR DoubleLine Emerging Markets Fixed Income ETF (EMTL - Free Report) — Down 10.9%
This ETF is active and does not track a benchmark. Chile, Mexico, Panama, Colombia and Indonesia take about 60% of the fund. It yields 4.04% annually.
EMQQ The Emerging Markets Internet & Ecommerce ETF (EMQQ - Free Report) — Down 11.4%
The underlying EMQQ The Emerging Markets Internet & Ecommerce Index is designed to measure the performance of an investable universe of publicly-traded, emerging market internet and ecommerce companies. Tencent (9.08%), Alibaba (8.1%) and Naspers (7.3%) are the top three holdings of the fund.
Losers
Global X MSCI SuperDividend Emerging Markets ETF (SDEM - Free Report) — Down 34.9%
The underlying MSCI Emerging Markets Top 50 Dividend Index tracks the performance of 50 equally-weighted companies that rank among the highest dividend yielding equity securities in Emerging Markets. It yields 10.02% annually.
Cambria Emerging Shareholder Yield ETF (EYLD - Free Report) — Down 32.1%
The underlying Cambria Emerging Shareholder Yield Index includes stocks in emerging market countries with high cash distribution characteristics. It yields 6.04% annually.
ALPS Emerging Sector Dividend Dogs ETF (EDOG - Free Report) — Down 31.8%
The underlying S-Network Emerging Sector Dividend Dogs Index selects five stocks in each of the ten GICS sectors that make up the S-Network Emerging Markets which offer the highest dividend yields as of the last trading day in November.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>