Risk Trades Gain Ground

Risk trades are back on today. iShares South Africa (EZA - commentary - Trade Now) gained more than 3.5%, Market Vectors Brazil Small Cap (BRF - commentary - Trade Now) headed for a return of more than 4%, iShares Thailand (THD - commentary - Trade Now) advanced 3.5%, while recent outperformers iShares Sweden (EWD - commentary - Trade Now) and iShares South Korea (EWY - commentary - Trade Now) both had gains north of 3%. PowerShares DB Oil (DBO - commentary - Trade Now) added 2%.

This morning I mentioned PowerShares DB Base Metals (DBB - commentary - Trade Now), but it closed down for the day. A story in Bloomberg mentioned that pig farmers in China have been speculating in and stockpiling industrial metals. I doubt that will end well.

I also mentioned Market Vectors Russia (RSX - commentary - Trade Now), iShares Turkey (TUR - commentary - Trade Now) and Market Vectors Vietnam (VNM - commentary - Trade Now), but their returns were about 1% less than the emerging markets listed above. Market Vectors Indonesia (IDX - commentary - Trade Now) also trailed, with a gain of less than 3%.

Unless there's a change in leadership, I expect these funds to return to their position of outperformance (excepting the newly issued VNM) for as long as the rally lasts. Whether that starts tomorrow is another matter, depending on how much confidence was shaken on Monday.

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At the time of publication, Dion owned EZA, TUR and EWD.

Don Dion is president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.