The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK ( ETF Expert) -- In "Why Russia ETFs Are Receiving So Much Love," I discussed several reasons for the recent investment success. They included: (1) non-OPEC oil and gas exposure during Middle East rebellions, (2) large weighting in iron/steel for Japan's rebuilding, and (3) substantial GDP contribution by Russia to global growth.
Yet Russia isn't the only BRIC component that's been traveling a comeback trail. Shortly after the Libyan uprising in late February, I pointed out that emerging markets had been "hanging in" better than developed world markets. And that was before Japan's earthquake, tsunami and nuclear crisis. (See "Emerging Regions Are Recovering More Ground Than Developed Regions" )
Now, the researchers at Bespoke are confirming a familiar pattern in equities. Specifically, emerging market stocks tend to "peak" before developed country stocks; then, emergers "bottom out" before developed country stock assets; then, emerging equities "recover" before developed world equities.Here are the month-over-month returns for popular BRIC component ETFs versus popular developed country ETFs: Calendar-year trackers may not view these differences as substantial. After all, year-to-date percentage gains/losses still appear to confirm the superiority of U.S. Stock ETFs. On the other hand, contrarians have taken notice of the massive outflows from Emerging Market ETFs in 2011. Has the "smart money" been exiting? Or has the crowd been chasing returns because emergers began to flounder in November of 2010? The answer is not a simple one. Recent outperformance by emergers may simply indicate smaller losses in the near-term, rather than big-time bullish gains around the corner. After all, the Guggenheim BRIC Fund (EEB)has hit "lower lows" in February and in March. It's also below its 50-day moving average.
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