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While most of the developed world—besides the U.S. -- is struggling, the emerging Southeast Asian countries are still considered attractive destinations. This is largely thanks to their solid performances last year, high growth rates, and strong demographics going forward (read: Can Anything Stop These Southeast Asia ETFs?).
In particular, Thailand has been a great market to be in. The nation has rebounded quickly from strong floods and led the way in the Southeast Asian markets.
Even during economic uncertainty, the Thai economy has managed to grow at an impressive rate and is even expected to show further acceleration this year. This is largely on the back of solid domestic demand and healthy investment, a trend which could definitely continue this year.
In addition, the tourism, exports and automobile industries will continue to flourish throughout the year, driving further growth in the country. The nation has a relatively low public debt level and a modest budget gap, metrics that are far lower than many of their more well-regarded peers in both the Asia-Pacific region and the West.
As such, Thailand is one of the more resilient economies compared with its Asian peers in regards to the risk and headwinds from Europe (read: Do Corrupt Countries Make for Great ETFs?).
Given the strong fundamentals, a look at the top ranked Thailand ETF could be a good idea, especially based on our Zacks ETF Ranking system.
About the Zacks ETF Rank
This technique provides a recommendation for the ETF in the context of our outlook of the underlying industry, sector, style box or asset class. Our proprietary methodology also takes into account the risk preferences of investors as well.
The aim of our model is to select the best ETFs within each risk category. We assign each ETF one of the five ranks within each risk bucket. Thus, the Zacks Rank reflects the expected return of an ETF relative to other ETFs with a similar level of risk (see more in the Zacks ETF Rank Guide).
For investors seeking to apply this methodology to their portfolio in the Thai market, we have taken a closer look below at the top ranked THD, which currently has a Zacks ETF Rank of 1 (Strong Buy):
iShares MSCI Thailand Investable Market Index ETF (THD)
This fund seeks to match the price and yield of the MSCI Thailand Investable Market Index, before fees and expenses. Holding 91 stocks in its basket, the fund is still somewhat concentrated from both a sector and an individual security perspective.
Banks comprise roughly one-third of the total assets while energy companies make up another fifth (read: Banking ETFs 101). Beyond this, materials, consumer staples and telecoms round out the rest of the top five, making up a combined 28%. From an individual holdings perspective, the product puts about 56% of assets in top 10 holdings.
While the ETF focuses on large caps that account for 85% share, mid cap takes the remaining portion in the basket, with 2% going toward the small caps. The fund has a nice mixture of blend, growth and value securities, ensuring broad diversification in terms of style (read: The Best Investing Style ETF This Fiscal?).
The product so far has managed assets of over $1 billion and has seen fund inflows of roughly $180 million this year. The fund has a pretty solid level of daily volume, suggesting that bid ask spreads are relatively tight and that total costs will not come in much higher than the 60 bps expense ratio. Further, it is less volatile as indicated by its annualized standard deviation of 18.17%.
Although the country may not be a popular destination for many U.S. investors, its ETF’s performance has been quite remarkable. THD is the best performing ETF in the list, delivering a robust return of more than 138% over the trailing past three years, 37.7% last year and over 9.5% year-to-date.
These impressive returns make THD a very attractive choice in the emerging market space, and especially for those that are light on emerging market ETFs. Thanks to this solid history and some fundamental tailwinds, this top ranked ETF could still be a great pick for many investors heading into the second quarter.
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