Posted on 08/23/2011
The PowerShares DWA Emerging Markets Technical Leaders ETF (PIE) was recently featured in Barron's Magazine in an article that discussed ways to gain exposure to the budding Emerging Market space. The feature, More Ways to Cross the Frontier, looked specifically at funds as a way to garner exposure to the Emerging and Frontier markets. According to the article, “Frontier and Emerging Market funds are a way to buy into growth markets without having to worry about currencies and trading on overseas bourses." But which fund should you chose since there are so many options?
Well, as it turns out, one of the best ways is through the PIE. According to Barrons, PIE is the best performing diversified Emerging Market ETF as it's "up 12.7% over the last 12 months and has fallen only 4.1% since January 1st." PIE offers tactical exposure to the Emerging Market space, investing in 100 "high relative strength" stocks from emerging market economies. The components and weightings are dictated by trends in relative strength rather than the size of a specific economy. The ETF is re-balanced quarterly as a new relative strength screening process is applied, and the ETF remains 100% invested at all times. One reason for PIE's success can be attributed to the fact that its exposure is able to adjust based in changes in relative strength among this asset class. Notice how PIE's current weightings are towards areas that have been able to outperform on a relative basis as well as offer lower volatility in the market. Malaysia represents the biggest country weighting at nearly 24%, and has exhibited low volatility during the recent market correction across global equities. PIE is also overweight in other areas like South Korea, Mexico, Indonesia, and Thailand, which have been consistent leaders in the Emerging Market space throughout the course of the past year or so.