Small Cap Emerging (EWX): Rowland’s top fund for 2010
For his top fund selection for 2010, fund specialist Ron Rowland turns to the SPDR S&P Emerging Markets Small Cap (NYSE: EWX).
In his All Star Investor, he suggests, "This is the easiest way to gain access to the small cap stocks of all the emerging markets, as it includes stocks from more than 20 countries countries."
"SPDR S&P Emerging Markets Small Cap excludes stocks with a market caps exceeding $2 billion (US) -- the ones that dominate traditional cap-weighted emerging market ETFs.
"Historically, the growth of emerging market economies has been predominately export driven -- the large cap companies that produce and export products to the U.S., Europe, Japan, and other consuming nations.
"There are also a few large cap companies (banks, utilities, and construction) within each emerging market nation that help provide the infrastructure needed.
"The major change now underway is the growth of the middle class within each of these countries. The people of the emerging market nations are becoming more prosperous and are becoming significant consumers themselves.
"In addition to economic growth via exports, many of these nations are now experiencing rapid internal growth. The large cap and export oriented companies will still do well, but the real opportunity is in the small cap segment of emerging markets.
"These small cap companies are undervalued compared to their large cap brethren and are better positioned to benefit from the internal growth of each nation."
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