Are Small-Caps A Better Emerging Market ETF Option?
By Tom Lydon:
Emerging market stocks and exchange traded funds provide high returns but are known for their high volatility. However, small-cap emerging market equities have shown robust returns, according to a financial research firm.MSCI found that emerging market small-caps have generated a 14.1% annualized return over the last decade while also providing portfolio diversification in recent years, reports Lewis Braham for Bloomberg.Emerging market large-caps moved with the S&P 500 Index 84% of the time over the past three years - emerging market small-caps only had a 0.69 correlation to the S&P. Additionally, over the past 17 years, the average emerging market small-cap has been less volatile than the average large-cap.Emerging market small-caps are less sensitive to developed country problems as they are tied to domestic growth."If you look at the broad large-cap emerging-markets index, a lot of the stocks in it are exposed to the developed world, whichComplete Story »