Top 10 Asia ETFs -- Excluding China and India

The area formerly known as the Asian Tiger countries, mot including Japan or Hong Kong, have never been more important even as most underperform recently. Those countries are blessed with excellent demographics and natural resources. Some are industrial powers like Singapore, Taiwan and South Korea while others offer good commodity plays like Malaysia, Philippines and Indonesia.

But, as with most investing schemes from our view, timing is everything.

Japan certainly is in decline. Its debt burdens combined with poor demographics suggest a country that has more long term problems than the eurozone currently. For them these issues are becoming better known throughout the investment world. Clearly most know the markets there have been in a bear market since the 1990 peak with the exception of a few impressive bear market rallies. Nevertheless, large and even small Japanese companies have become multinational in scope and highly dependent on exports. Most are diversified and may do well given their global exposure away from domestic bear markets or conditions.

The former Asian Tiger markets have more volatility (beta) compared with other more established markets. When markets and global economies are stronger these markets generally with outperform; and, conversely when global economies are weak they will underperform. The Philippines, Indonesia, Malaysia and Vietnam are blessed with both good demographics (younger population) and are rich in natural resources. Longer term these economies could decouple from other markets given their own domestic demand and needs.

In this sector there really are only 10 ETFs worth evaluating now. But as these economies grow no doubt many will ETF offerings will expand into various subsectors within each country beginning with small-caps and then various others: consumer, financial, natural resources and so forth.

We rank the top 10 ETF by our proprietary stars system as outlined below. If an ETF you're interested in is not included but you'd like to know a ranking send an inquiry to support@ETFDigest.com and we'll attempt to satisfy your interest.


Strong established linked index
Excellent consistent performance and index tracking
Low fee structure
Strong portfolio suitability
Excellent liquidity


Established linked index even if "enhanced"
Good performance or more volatile if "enhanced" index
Average to higher fee structure
Good portfolio suitability or more active management if "enhanced" index
Decent liquidity


Enhanced or seasoned index
Less consistent performance and more volatile
Fees higher than average
Portfolio suitability would need more active trading
Average to below average liquidity


Index is new
Issue is new and needs seasoning
Fees are high
Portfolio suitability also needs seasoning
Liquidity below average

We feature a technical view of conditions from monthly chart views. Simplistically, we recommend longer-term investors stay on the right side of the 12 month simple moving average. When prices are above the moving average, stay long, and when below remain in cash or short. Some more interested in a fundamental approach may not care so much about technical issues preferring instead to buy when prices are perceived as low and sell for other reasons when high; but, this is not our approach.

Premium members to the ETF Digest receive added signals when markets become extended such as DeMark triggers to exit overbought/oversold conditions


#1: iShares Japan ETF (EWJ)

EWJ follows the MSCI Japan Index which is a proprietary index covering the Japanese equity market. The fund was launched in March 1996. The expense ratio is .54%. AUM (Assets under Management) equal $5.3 billion and average daily trading volume is 16M shares. (In early summer 2011 AUM were $8 billion and average daily trading volume was over 28M shares demonstrating the flight from international markets in general.) As of early January 2012 the annual dividend yield was 3.00% and YTD return -.44%.

A competitive issue would be JPP (SPDR Russell/Nomura Prime Japan ETF) with an expense ratio of .50% and AUM of $14 million and average daily trading volume of less than 4K shares.

Also ProShares features leveraged products for hedging and speculating with similar tracking characteristics to EWJ and others.

We rank Japan at the top of the list due to its size and quality of companies within the related index, which for the most part, are multinational companies that are household names.

Data as of First Quarter 2012

EWJ Top Ten Holdings & Weightings
  1. Toyota Motor Corp (7203): 4.37%
  2. Mitsubishi UFJ Financial Group, Inc. (8306): 2.63%
  3. Honda Motor Co Ltd (7267): 2.47%
  4. Canon, Inc. (CAJFF): 2.41%
  5. Sumitomo Mitsui Financial Group Inc (SMFNF): 1.77%
  6. Takeda Pharmaceutical Co., Ltd. (4502): 1.55%
  7. Fanuc Corp (6954): 1.44%
  8. SOFTBANK Corp (SFTBF): 1.44%
  9. Mizuho Financial Group Inc (8411): 1.43%
  10. Mitsubishi Corporation (8058): 1.35%

 

#2: iShares TOPIX 150 ETF (ITF)

ITF follows the S&P Tokyo Stock Price Index 150 Index which measures the performance of the 150 most liquid securities from each major market sector listed in Tokyo. The fund was launched in October 2010. The expense ratio is .50%. AUM equal $72 million and average daily trading volume is 11K shares. (Current AUM contrasts with $110 million as of early summer 2011.) As of early January 2012 the annual dividend yield was 1.76% and YTD performance 1.76%.

Data as of First Quarter 2012

ITF Top Ten Holdings & Weightings
  1. Toyota Motor Corporation (7203): 5.36%
  2. Mitsubishi UFJ Financial Group, Inc. (8306): 3.64%
  3. Canon, Inc. (CAJFF): 3.25%
  4. Honda Motor Company (7267): 2.88%
  5. Nippon Telegraph and Telephone Corporation (9432): 2.45%
  6. Sumitomo Mitsui Financial Group, Inc. (SMFNF): 2.37%
  7. Mizuho Financial Group, Inc. (8411): 1.96%
  8. Takeda Pharmaceutical Co., Ltd. (4502): 1.91%
  9. Fanuc Ltd. (6954): 1.82%
  10. Mitsubishi (8058): 1.75%

 

#3: iShares South Korea ETF (EWY)

EWY follows the MSCI South Korea Index which is a proprietary index tracking stocks within the South Korean equity market. The fund was launched in May 2000. The expense ratio is .61%. AUM equal $5 billion and average daily trading volume is over 3.3M shares. As of early January 2012 the annual dividend yield was .79% and YTD return -.13%. South Korea is no longer really an emerging market in many people's opinion given it's a developing global manufacturing and consumer titan. One reason it's considered still and emerging market is that large ETFs and indexes tied to it would be too disrupted to move it out given nearly a 13% weighting. This situation is a conflict of interest for these funds but EWY is a standalone investment.

Data as of First Quarter 2012

EWY Top Ten Holdings & Weightings
  1. Samsung Electronics Co Ltd (SSNLF): 19.62%
  2. Hyundai Motor Co Ltd (HYUO): 5.81%
  3. POSCO: 4.31%
  4. Hyundai Mobis: 3.66%
  5. Shinhan Financial Group Co., Ltd.: 3.09%
  6. Kia Motors Corp: 2.96%
  7. Lg Chem Ltd: 2.65%
  8. KB Financial Group: 2.45%
  9. Samsung Electnc Pfd: 2.24%
  10. Hynix Semiconductor Inc: 2.04%

 

 

#4: iShares Taiwan ETF (EWT)

EWT follows the MSCI Taiwan Index which remains a proprietary index following securities in the general Taiwan equity market. The fund was launched in June 2000. The expense ratio is .71%. AUM equal $2.2 billion and average daily trading volume is 9M shares. (In the early summer 2011 AUM was $3.4 billion which shows losses in markets as well as investors outflows.) As of early January 2012 the annual dividend yield was 2.21% and YTD return was 1.02%.

Taiwan markets are considered domestically as a "retail" market making for less institutional activity. One of the primary market drivers is Taiwan Semiconductor.

Data as of First Quarter 2012

EWT Top Ten Holdings & Weightings
  1. Taiwan Semiconductor Manufacturing (2330): 17.53%
  2. Hon Hai Precision Ind. Co., Ltd. (2317): 6.83%
  3. Chunghwa Telecom Co Ltd (2412): 3.58%
  4. HTC Corporation (2498): 3.30%
  5. China Steel Corporation (2002): 3.14%
  6. Formosa Plastics Corporation (1301): 3.07%
  7. Mediatek Inc. (2454): 2.70%
  8. Nan Ya Plastics Corporation (1303): 2.52%
  9. Formosa Chemicals & Fibre Corporation (1326): 2.14%
  10. Cathay Financial Holding Co., Ltd. (2882): 1.98%

 

#5: iShares Singapore ETF (EWS)

EWS follows the MSCI Singapore Index which is a proprietary index covering equities in the Singapore equity market. The fund was launched in March 1996. The expense ratio is .53%. AUM equal $1.3 billion and average daily trading volume is 2M shares. (As of early summer 2011 AUM was $1.9 billion and average daily trading volume is 2.5M shares showing a sharp decline with markets.) As of early January 2012 the annual dividend yield was 3.35% and YTD return 2.40%.

It's important to remember Singapore is the financial and economic hub for most of Southeast Asia. Its harbor is one of the largest and busiest in the world.

Data as of First Quarter 2012

EWS Top Ten Holdings & Weightings

  1. Singapore Telecommunications Limited (Z74): 11.74%
  2. DBS Group Holdings Ltd (D05): 10.29%
  3. Oversea-Chinese Banking Corp Ltd (O39): 9.51%
  4. United Overseas Bank Limited (U11): 9.34%
  5. Keppel Corp Ltd (KPELF): 6.29%
  6. Wilmar International Ltd (F34): 4.49%
  7. Genting Singapore PLC (G13): 4.42%
  8. Jardine Cycle & Carriage Ltd. (C07): 3.12%
  9. CapitaLand Limited (C31): 3.10%
  10. Singapore Press Holdings Limited (T39): 2.94%

 

 

#6: iShares Malaysia ETF (EWM)

EWM follows the MSCI Malaysia Index which is a proprietary index follow the equity market of Malaysia. The fund was launched in March 1996. The expense ratio is .53%. AUM equal $856 million and average daily trading volume is 1.9M shares. (These figures compare with $1.1 billion and average daily trading volume equals 2.6M shares in the early summer 2011.) As of early January 2012 the annual dividend yield was 4.06% and YTD return .90%.

Malaysia remains a resource rich country (rubber & palm oil) with excellent demographics indicating a consumer driven economy as well.

Data as of First Quarter 2012

EWM Top Ten Holdings & Weightings
  1. CIMB Group Holdings Berhad: 9.61%
  2. Malayan Banking Bhd Maybank: 7.78%
  3. Sime Darby Berhad (Malaysia): 6.78%
  4. Genting Bhd (3182): 6.23%
  5. IOI Corp Berhad: 4.48%
  6. Tenaga Nasional Berhad: 4.29%
  7. Petronas Chemicals: 4.00%
  8. Public Bank Berhad: 3.69%
  9. Axiata Group BHD: 3.61%
  10. Maxis Bhd: 3.45%

 

#7: Van Eck Indonesia ETF (IDX)

IDX follows the Market Vectors Indonesia Index which features companies domiciled in Indonesia or earning at least 50% of their revenues from the country. The fund was launched in January 2009. The expense ratio is .60%. AUM equal $503 million and average daily trading volume is 366K shares. (In early summer 2011, AUM was $800 million and average daily trading volume is 400K shares reflecting the sharp market decline.) As of early January 2012 the annual dividend yield was 1.6% and YTD return was 1.4%.

Like other countries in the region, Indonesia is rich in natural resources from timber, agriculture mining and energy. The country is also an OPEC member.

Data as of First Quarter 2012

IDX Top Ten Holdings & Weightings
  1. Astra International Tbk (ASII): 8.46%
  2. Bank Central Asia Tbk (BBCA): 8.07%
  3. P.T. Telekomunikasi Indonesia Tbk. ADR (TLK): 6.95%
  4. Bank Rakyat Indonesia (Persero) Tbk B: 6.69%
  5. PT Bank Mandiri (Persero) TBK: 5.92%
  6. United Tractors Tbk: 4.36%
  7. PT Perusahaan Gas Negara (Persero) TBK (PGAS): 3.86%
  8. Bumi Resources Tbk: 3.53%
  9. Gudang Garam TBK: 3.51%
  10. Golden Agri-Resources Ltd. (E5H): 3.50%

 

#8: iShares Thailand ETF (THD)

THD follow the MSCI Thailand Investable Market Index which again is another proprietary index featuring coverage of the overall Thailand equity market. The fund was launched in March 2008. The expense ratio is .62%. AUM equal $462 million and average daily trading volume is 216K shares. (This compares with the early summer 2011 with AUM of $680 million and average daily trading volume is 250K shares.) As of early January 2012 the annual dividend yield was 2.75% and YTD return -.07%.

Tsunamis and flooding didn't slow the Thai market down much. Once again this is due to excellent demographics and large natural resources.

Data as of First Quarter 2012

THD Top Ten Holdings & Weightings
  1. PTT Public Co Ltd: 10.92%
  2. PTT Exploration & Production PCL (PTTEP): 7.53%
  3. Siam Commercial Bank Public Co Ltd: 7.06%
  4. Kasikornbank Public Company, Ltd. (KBANK-F): 5.77%
  5. Bangkok Bank PCL (BBL-F): 5.53%
  6. Advanced Info Service Public Company Limited: 5.19%
  7. CP All Public Co Ltd: 4.59%
  8. Ptt Chemical Public Company Limited ADR (PTTCH-R): 4.55%
  9. Siam Cement: 4.45%
  10. Charoen Pokphand Foods Public Co Ltd: 4.14%

#9: iShares Philippines ETF (EPHE)

EPHE (iShares Philippines ETF) follows the MSCI Philippines Investable Market Index which again is a proprietary index covering the broad equity market in the country. The fund was launched in September 2010. The expense ratio is .65%. AUM equals $70 million and average daily trading volume of 53K shares. (AUM during the early summer of 2011 was $85 million and average daily trading volume is 82K shares which show, despite good performance, money was still flowing-out of the market.) As of early January 2012 the annual dividend yield is 1.34% and YTD return is 6.02%%.

The Philippines is another resource rich country with mining, agriculture and excellent demographics making the consumer sector more dynamic. Most important is this is the best performing market of the group overall.

Data as of First Quarter 2012

EPHE Top Ten Holdings &Weightings
  1. Philippine Long Distance Telephone (PHTCF): 8.84%
  2. SM Investments Corp: 8.17%
  3. Ayala Land Inc: 6.98%
  4. Aboitiz Equity Ventures Inc: 6.48%
  5. Sm Prime Holdings Inc: 6.05%
  6. Manila Electric Co: 5.69%
  7. Aboitiz Power Corp: 4.58%
  8. Ayala Corp: 4.35%
  9. BDO Unibank Inc: 4.32%
  10. Energy Development Corp: 3.86%

 

#10: Van Eck Vietnam ETF (VNM)

VNM follows the Market Vectors Vietnam Index which includes companies either domiciled in the country or earning at least 50% of its revenues from the country. The fund was launched in August 2009. The expense ratio is .76%. AUM equal $193 million and average daily trading volume is 130K shares. (This compares with early summer 2011 AUM $265 million and average daily trading volume is 175K shares.) As of early January 2012 the annual dividend yield was 1.10% and YTD return of -1.03%.

Here it should be noted that inflation and currency devaluation have crippled equity performance. Further the economy and country are still heavily state controlled as a carryover from communist days continues. This doesn't help the free market economy despite much investor interest in the country.

Data as of First Quarter 2012

VNM Top Ten Holdings & Weightings
  1. BaoViet Holdings: 8.49%
  2. Vietnam Joint Stock Commercial Bank for Industry and Trade: 6.94%
  3. Petrovietnam Fertilizer & Chemicals: 6.30%
  4. Joint Stock Commercial Bank For Foreign Trade of Vietnam: 6.24%
  5. Vincom Joint Stock Co: 6.23%
  6. Premier Oil PLC (PMO): 6.03%
  7. Charoen Pokphand Foods Public Co Ltd: 5.79%
  8. Oil & Natural Gas Corporation Ltd. (ONGC): 5.06%
  9. Talisman Energy Inc (TLM): 4.71%
  10. Gamuda Berhad: 4.54%

This area of the world ex-Japan is the most fertile for economic growth and development given youthful populations and high levels of natural resources. Naturally, exports remain a large part of economic activity but down the road internal consumer demand primarily due to excellent demographics can also be expected.

As indicated Japan has significant debt problems and an aging population. Nevertheless many companies in the country are multinational with manufacturing and divisions in other parts of the world which can offset domestic concerns.

Negative spillover from the eurozone problems continue to plague and unnerve investors in all global markets.

It's also important to remember that ETF sponsors have their own competitive business interests when issuing products which may not necessarily align with your investment needs. New ETFs from highly regarded and substantial new providers are also being issued. These may include Charles Schwab's ETFs and Scottrade's Focus Shares which both are issuing new ETFs with low expense ratios and commission free trading at their respective firms. These may also become popular as they become seasoned. 

For further information about portfolio structures using technical indicators like DeMark and other indicators, take a free 14-day trial at ETF Digest . Follow us on Twitter and Facebook as well and join our group conversations.

You may address any feedback to: feedback@etfdigest.com   

The ETF Digest has no current positions in the featured ETFs.

(Source for data is from ETF sponsors and various ETF data providers)

 

 
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Dave Fry is founder and publisher of ETF Digest, Dave's Daily blog and the best-selling book author of Create Your Own ETF Hedge Fund, A DIY Strategy for Private Wealth Management, published by Wiley Finance in 2008. A detailed bio is here: Dave Fry.