Top 10 Asia ETFs -- Excluding China and India

NEW YORK ( ETF Digest) -- Excluding Japan, the area formerly known as the Asian Tiger countries have never been more important. These 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 in addition 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 will 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.

Lastly, these countries particularly benefit from economic growth and demand for resources from China. When China grows, so too do these countries and vice versa.

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

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.

 

#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 $301 million and average daily trading volume is 216K shares. As of late March 2012 the annual dividend yield was 1.95% and YTD return 35.81%. The one year return was -16.80%.

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 Late March 2012

VNM Top Ten Holdings & Weightings
  1. Vincom Joint Stock Co: 9.69%
  2. Vietnam Joint Stock Commercial Bank for Industry and Trade: 8.13%
  3. Joint Stock Commercial Bank For Foreign Trade of Vietnam: 6.86%
  4. BaoViet Holdings: 6.80%
  5. Petrovietnam Fertilizer & Chemicals: 5.53%
  6. Premier Oil PLC (PMO): 4.86%
  7. Oil & Natural Gas Corporation Ltd. (ONGC): 4.61%
  8. Gamuda Berhad: 4.58%
  9. Charoen Pokphand Foods PCL DR (CPOUF): 4.56%
  10. Talisman Energy Inc (TLM): 4.00%

 

 

#9: iShares Philippines ETF (EPHE)

EPHE 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 $114 million and average daily trading volume of 104K shares. As of late March 2012 the annual dividend yield was .95% and YTD return 19.43%. The one year return was 26.14%.

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

Data as of Late March 2012

EPHE Top Ten Holdings &Weightings
  1. Philippine Long Distance Telephone (PHTCF): 8.52%
  2. SM Investments Corp: 8.13%
  3. Ayala Land Inc: 7.42%
  4. Aboitiz Equity Ventures Inc: 6.41%
  5. Sm Prime Holdings Inc: 6.32%
  6. Manila Electric Co: 5.16%
  7. Ayala Corp: 4.84%
  8. BDO Unibank Inc (BDO): 4.15%
  9. Aboitiz Power Corp: 4.09%
  10. San Miguel Corporation ADR (SMGBY): 3.72%

 

#8: iShares Thailand ETF (THD)

THD follows 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 $700 million and average daily trading volume is 200K shares. As of late March 2012 the annual dividend yield was 12.49% and YTD return 21.66%. The one year return was 14.67%.

Tsunamis and flooding didn't slow the Thai market down much. Once again this is due to excellent demographics and more than an adequate reservoir of natural resources.

Data as Late March 2012

THD Top Ten Holdings & Weightings
  1. Ptt Public Company Limited DR (PUTRF): 10.82%
  2. PTT Exploration & Production PCL (PTTEP-R): 7.46%
  3. Siam Commercial Bank Public Co Ltd (SMUUF): 7.06%
  4. Kasikornbank Public Company, Ltd. (KBANK-F): 6.06%
  5. Bangkok Bank PCL (BBL-F): 5.67%
  6. CP All Public Co Ltd (CPALL-R): 5.08%
  7. Advanced Info Service Public Co Ltd: 4.97%
  8. Siam Cement: 4.49%
  9. Ptt Chemical Public Company Limited ADR (PTTCH-R): 4.32%
  10. Charoen Pokphand Foods PCL DR (CPOUF): 3.80%

 

 

 

#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 $526 million and average daily trading volume is 439K shares. As of late March 2012 the annual dividend yield was 1.54% and YTD return 2.45%. The one year return was 2.98%.

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 Late March 2012

IDX Top Ten Holdings & Weightings
  1. Astra International Tbk (ASJ): 8.27%
  2. Bank Central Asia Tbk (BBCA): 7.69%
  3. Bank Rakyat Indonesia (Persero) Tbk B (BYR): 6.63%
  4. P.T. Telekomunikasi Indonesia Tbk. ADR (TLK): 6.36%
  5. PT Bank Mandiri (Persero) TBK (PQ9): 5.86%
  6. PT United Tractors TBK (UTY): 4.90%
  7. PT Bumi Resources TBK (PJM): 4.21%
  8. Perusahaan Gas Negara (Persero) Tbk B (PGAS): 3.83%
  9. Banpu Public Company Limited (BANPU-R): 3.64%
  10. PT Semen Gresik (Persero) TBK (SMS2): 3.64%

 

 

#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 $937 million and average daily trading volume is 1.7M shares. As of late March 2012 the annual dividend yield was 4.13% and YTD return 8.06%. The one year return was -4.07%.

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

Data as Late March 2012

EWM Top Ten Holdings & Weightings
  1. CIMB Group Holdings Berhad: 9.30%
  2. Malayan Banking Bhd Maybank: 7.87%
  3. Sime Darby Berhad (Malaysia): 7.00%
  4. Genting Bhd (3182): 5.89%
  5. IOI Corp Berhad: 4.60%
  6. Tenaga Nasional Berhad: 4.54%
  7. Petronas Chemicals: 4.48%
  8. Public Bank Berhad: 3.90%
  9. Maxis Bhd: 3.63%
  10. Axiata Group BHD: 3.48%

 

#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 $1.6 billion and average daily trading volume is 1.8M shares. As of late March 2012 the annual dividend yield was 3.68% and YTD return 17.73%. The one year return was -1.00%.

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 Late March 2012

EWS Top Ten Holdings & Weightings
  1. Singapore Telecommunications Limited (Z74): 10.78%
  2. DBS Group Holdings Ltd (D05): 10.53%
  3. Oversea-Chinese Banking Corp Ltd (O39): 9.43%
  4. United Overseas Bank Limited (U11): 9.43%
  5. Keppel Corp Ltd (KPELF): 6.83%
  6. Genting Singapore PLC (G13): 4.19%
  7. Wilmar International Ltd (F34): 4.11%
  8. CapitaLand Limited (C31): 3.24%
  9. Jardine Cycle & Carriage Ltd. (C07): 2.95%
  10. Singapore Airlines Limited (C6L): 2.72%

 

#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 $2.5 billion and average daily trading volume is 7M shares. As of late March 2012 the annual dividend yield was 3.52% and YTD return 14.43%. The one year return was -3.94%.

Taiwan markets are considered domestically as a "retail" market making for less institutional activity. One of the primary market drivers is Taiwan Semiconductor and many popular Apple components are made in Taiwan.

Data as Late March 2012

EWT Top Ten Holdings & Weightings
  1. Taiwan Semiconductor Manufacturing (2330): 16.35%
  2. Hon Hai Precision Ind. Co., Ltd. (2317): 7.60%
  3. HTC Corporation (2498): 4.09%
  4. Formosa Plastics Corporation (1301): 2.96%
  5. Chunghwa Telecom Co Ltd (2412): 2.79%
  6. China Steel Corporation (2002): 2.79%
  7. Nan Ya Plastics Corporation (1303): 2.77%
  8. Mediatek Inc. (2454): 2.61%
  9. Formosa Chemicals & Fibre Corporation (1326): 2.16%
  10. Cathay Financial Holding Co., Ltd. (2882): 1.88%

 

 

#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 $3.5 billion and average daily trading volume is over 2.3M shares. As of late March 2012 the annual dividend yield was 1.17% and YTD return 12.92%. The one year return was -.54%.

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 stand-alone investment. Also note the heavy weightings in Samsung companies which exceed even weightings in Apple in some U.S. tech indexes.

Data as of Late March 2012

EWY Top Ten Holdings & Weightings
  1. Samsung Electronics Co Ltd (SSNLF): 21.28%
  2. Hyundai Motor Co Ltd (HYUO): 5.32%
  3. POSCO: 4.35%
  4. Hyundai Mobis: 3.10%
  5. Lg Chem Ltd: 2.95%
  6. Shinhan Financial Group Co., Ltd.: 2.95%
  7. Kia Motors Corp: 2.71%
  8. Hynix Semiconductor Inc: 2.51%
  9. KB Financial Group: 2.42%
  10. Samsung Electnc Pfd: 2.30%

 

 

 

 

#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 $79 million and average daily trading volume is 5K shares. As of late March 2012 the annual dividend yield was 2.81% and YTD return 11.09%. The one year return was -4.63%.

Data as of Late March 2012

ITF Top Ten Holdings & Weightings
  1. Toyota Motor Corporation (7203): 6.05%
  2. Mitsubishi UFJ Financial Group, Inc. (8306): 4.01%
  3. Honda Motor Company (7267): 3.26%
  4. Canon, Inc. (CAJFF): 2.97%
  5. Sumitomo Mitsui Financial Group, Inc. (SMFNF): 2.62%
  6. Mizuho Financial Group, Inc. (8411): 2.20%
  7. Nippon Telegraph and Telephone Corporation (9432): 2.05%
  8. Fanuc Ltd. (6954): 1.96%
  9. Mitsubishi (8058): 1.93%
  10. Takeda Pharmaceutical Co., Ltd. (4502): 1.78%

 

#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 $5.7 billion and average daily trading volume is 16M shares. As of late March 2012 the annual dividend yield was 1.95% and YTD return 9.66%. The one year return was -3.54%.

A competitive issue would be JPP (SPDR Russell/Nomura Prime Japan ETF) with an expense ratio of .50% and AUM of $15 million and average daily trading volume of less than 4K shares.

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.

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

Data as of Late March 2012

EWJ Top Ten Holdings & Weightings
  1. Toyota Motor Corp (7203): 5.04%
  2. Mitsubishi UFJ Financial Group, Inc. (8306): 2.93%
  3. Honda Motor Co Ltd (7267): 2.74%
  4. Canon, Inc. (CAJFF): 2.27%
  5. Sumitomo Mitsui Financial Group Inc (SMFNF): 2.04%
  6. Mizuho Financial Group Inc (8411): 1.69%
  7. Takeda Pharmaceutical Co., Ltd. (4502): 1.59%
  8. Mitsubishi Corporation (8058): 1.52%
  9. Fanuc Corp (6954): 1.52%
  10. Mitsui & Co Ltd (8031): 1.33%

 

 

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

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 and perhaps a contraction in China may slow bullish returns.

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The ETF Digest is long positions in EWY.

The opinions and/or guidance provided herein should not be construed as investment advice and are merely the general opinion of the ETF Digest.

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