Emerging Europe funds / strategies?

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charlesmont
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Emerging Europe funds / strategies?

Post by charlesmont » Fri Mar 30, 2018 3:27 am

Hi,
Does anyone have any fund/ETF picks or strategies for exposure to Emerging Europe (i.e. Poland, Hungary, Turkey, Romania, Russia, Portugal, etc.)?

I've found surprisingly few choices for US investors to specifically target that geography/asset class.

Even a “Total Europe” fund with both developed and emerging countries included might be an option, but I don't see any that include both developed and EM.

Prefer low cost and broader reach, but not necessarily totally passive.

Thanks for your thoughts.

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Aptenodytes
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Re: Emerging Europe funds / strategies?

Post by Aptenodytes » Fri Mar 30, 2018 7:13 am

It would help to see your total AA. It sounds like you are tilting to Europe with your equity holdings, but you don't say that explicitly. And you are defining Europe in this context as west of Russia and north of Africa and Syria.

How big is your Europe tilt?

Within Europe, how big is your emerging market tilt?

How big is your non-Europe emerging market tilt?

The emerging European markets are likely to be very small as a percentage of all Europe. So my intuition is that unless you have a very large tilt it just doesn't matter what you do. And nobody here, I think, would recommend a huge tilt based on geography, because the received wisdom says it is not a basis for tilting.

That said, it seems easy and not overly expensive to tilt to Poland and Turkey. If you want to tilt to European emerging markets, consider using those as your proxy. If I were thinking that a European emerging market tilt made sense, I would probably also add Portugal, Greece and maybe Spain to the mix. What counts as "emerging" is not fixed.
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asif408
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Re: Emerging Europe funds / strategies?

Post by asif408 » Fri Mar 30, 2018 8:01 am

Ishares has a good collection of single country etfs. That's what I use. They have ones for Poland, Turkey, Russia, as well as some of the PIGS (Italy and Spain). You could probably pick 5-10 of those and create your own tilt, as I wouldn't recommend too much concentration in any one country.

Valuethinker
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Re: Emerging Europe funds / strategies?

Post by Valuethinker » Fri Mar 30, 2018 9:00 am

charlesmont wrote:
Fri Mar 30, 2018 3:27 am
Hi,
Does anyone have any fund/ETF picks or strategies for exposure to Emerging Europe (i.e. Poland, Hungary, Turkey, Romania, Russia, Portugal, etc.)?

I've found surprisingly few choices for US investors to specifically target that geography/asset class.

Even a “Total Europe” fund with both developed and emerging countries included might be an option, but I don't see any that include both developed and EM.

Prefer low cost and broader reach, but not necessarily totally passive.

Thanks for your thoughts.
Loving Viktor Orban, eh? ;-).

Google sends me to some UK Investment Trusts (Closed End Funds). Given US PFIC rules, US taxpayers have to avoid these, I gather.

Trying to strain through that:

https://www.cnbc.com/id/100712942

https://seekingalpha.com/article/404189 ... -indicator

http://www.emergingmarketskeptic.com/em ... unds-list/

https://www.cefa.com/FundSelector/FundDetail.fs?ID=3247

https://www.barrons.com/articles/out-of ... 1428115160

http://www.rareviewcapital.com/closed-e ... -volume-3/

https://www.morganstanley.com/im/en-us/ ... -fund.html

Note that Austria is also a good way of playing ECE. Greece, arguably, is also in that bracket.

As additional ways of playing this, I suggest the UK company Avon Rubber Products PLC (the leading manufacturer of gas masks and respiratory protective gear ;-)) -- it's a good way of hedging a Russia heavy position ;-).

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whodidntante
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Re: Emerging Europe funds / strategies?

Post by whodidntante » Fri Mar 30, 2018 10:05 am

Emerging Europe is dominated by Russia, Poland, and Turkey. So you could use single-country funds instead. You could also roll your own index since these markets are tiny. A couple dozen stocks would get you pretty close to capturing market beta.

Single-country emerging europe
EPOL iShares MSCI Poland ETF
RSX VanEck Vectors Russia ETF
TUR iShares MSCI Turkey ETF

As for me? I would buy a broad emerging markets fund and supplement with a value EM fund that does not reintroduce price like FNDE Schwab Fundamental Emerging Markets Large Company Index ETF. FNDE overweights emerging Europe due to the generally lower valuations there. You could also use GVAL Cambria Global Value ETF because it even more heavily overweights emerging Europe, at least right now.

charlesmont
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Re: Emerging Europe funds / strategies?

Post by charlesmont » Fri Mar 30, 2018 2:24 pm

Thanks for all of your responses.
My AA is 10% high quality bonds and 90% equities.
The equities are roughly 50% US (20LC, 5MC, 10SC, 5REIT) with a slight value tilt and 50% International (25 Developed, 20 EM, 5REIT) with a very slight value tilt as well. Almost everything is in Vanguard and iShares index funds and ETFs.

I just want to increase my Europe exposure (both Developed and EM} a bit, so it's not a major play in any way...more just a more precise rebalancing with some free cash. Not interested in getting as granular as country specific ETFs not in venturing outside of index funds or ETFs.

It just seems odd that, with the plethora of ETFs and indexes now, that there aren't any that either track a more inclusive group of emerging Europe or just a comprehensive Europe fund, cap-weighted or not.

Thanks for all your feedback and look forward to more.

charlesmont
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Joined: Fri Mar 30, 2018 3:13 am

Re: Emerging Europe funds / strategies?

Post by charlesmont » Fri Mar 30, 2018 2:26 pm

whodidntante wrote:
Fri Mar 30, 2018 10:05 am
Emerging Europe is dominated by Russia, Poland, and Turkey. So you could use single-country funds instead. You could also roll your own index since these markets are tiny. A couple dozen stocks would get you pretty close to capturing market beta.

Single-country emerging europe
EPOL iShares MSCI Poland ETF
RSX VanEck Vectors Russia ETF
TUR iShares MSCI Turkey ETF

As for me? I would buy a broad emerging markets fund and supplement with a value EM fund that does not reintroduce price like FNDE Schwab Fundamental Emerging Markets Large Company Index ETF. FNDE overweights emerging Europe due to the generally lower valuations there. You could also use GVAL Cambria Global Value ETF because it even more heavily overweights emerging Europe, at least right now.
Thanks. I'll take a look at those!

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whodidntante
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Re: Emerging Europe funds / strategies?

Post by whodidntante » Fri Mar 30, 2018 2:39 pm

charlesmont wrote:
Fri Mar 30, 2018 2:24 pm
It just seems odd that, with the plethora of ETFs and indexes now, that there aren't any that either track a more inclusive group of emerging Europe or just a comprehensive Europe fund, cap-weighted or not.
I know of two emerging Europe funds that used to exist. They were liquidated because they did not achieve critical mass. I don't know of any passively managed "total Europe" funds that include emerging Europe.

Valuethinker
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Re: Emerging Europe funds / strategies?

Post by Valuethinker » Sat Mar 31, 2018 7:09 am

charlesmont wrote:
Fri Mar 30, 2018 2:24 pm
Thanks for all of your responses.
My AA is 10% high quality bonds and 90% equities.
The equities are roughly 50% US (20LC, 5MC, 10SC, 5REIT) with a slight value tilt and 50% International (25 Developed, 20 EM, 5REIT) with a very slight value tilt as well. Almost everything is in Vanguard and iShares index funds and ETFs.

I just want to increase my Europe exposure (both Developed and EM} a bit, so it's not a major play in any way...more just a more precise rebalancing with some free cash. Not interested in getting as granular as country specific ETFs not in venturing outside of index funds or ETFs.

It just seems odd that, with the plethora of ETFs and indexes now, that there aren't any that either track a more inclusive group of emerging Europe or just a comprehensive Europe fund, cap-weighted or not.

Thanks for all your feedback and look forward to more.
I am pretty sure there are plenty of Developed Market Europe funds around (including UK or not).

What there is not is a "Developed and Emerging Market Europe" fund. But there is not for any other geography either? E.g. a fund which is USA + Canada + Mexico = a North American index tracking fund?

It seems odd to me that Poland is still "developing/ Emerging" market (or Czech Republic, or Slovakia) but it is as it is. There's a spectrum on these things I guess.

https://www.blackrock.com/investing/pro ... t&fr=43522

ishares (US site) is giving me the ability to track Europe as a whole. Or Poland, Russia, Austria

charlesmont
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Re: Emerging Europe funds / strategies?

Post by charlesmont » Sun Apr 01, 2018 9:57 pm

Thanks.
IEUR and IEV have a decent geographic diversity but really heavily weighted to big economies.

asif408
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Re: Emerging Europe funds / strategies?

Post by asif408 » Mon Apr 02, 2018 5:02 am

whodidntante wrote:
Fri Mar 30, 2018 2:39 pm
charlesmont wrote:
Fri Mar 30, 2018 2:24 pm
It just seems odd that, with the plethora of ETFs and indexes now, that there aren't any that either track a more inclusive group of emerging Europe or just a comprehensive Europe fund, cap-weighted or not.
I know of two emerging Europe funds that used to exist. They were liquidated because they did not achieve critical mass. I don't know of any passively managed "total Europe" funds that include emerging Europe.
Part of the issue is that it's easier for funds starting out to build their assets during a time of good performance. Anyone trying to start an emerging Europe fund since 2010 or 2011 would have had a tough time until the last year or two, as they have been among (if not the) worst performers over that time, other than some gold/precious metals funds. So by the time some emerging Europe funds succeed it'll probably be too late, and you'll have missed most of the excess return potential.

md&pharmacist
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Re: Emerging Europe funds / strategies?

Post by md&pharmacist » Mon Apr 02, 2018 9:45 pm

I own OPGIX (Oppenheimer Global Opportunities Fund). It is actively managed. It owns both US and international stocks. I don't like funds that limit a fund manager to a limited geographic location because if one country is unstable, the fund manager can shift to those counties with the best anticipated growth rates. So it is not only Europe. Probably not for you if you want only Europe.

This fund has a 5 star Morningstar review. Zacks Rank 1 (Strong Buy).

1 year return approximately 51%, 3 year 25.5, 5 year 22, 10 year 13.3.

charlesmont
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Re: Emerging Europe funds / strategies?

Post by charlesmont » Tue Apr 03, 2018 3:04 am

md&pharmacist wrote:
Mon Apr 02, 2018 9:45 pm
I own OPGIX (Oppenheimer Global Opportunities Fund). It is actively managed. It owns both US and international stocks. I don't like funds that limit a fund manager to a limited geographic location because if one country is unstable, the fund manager can shift to those counties with the best anticipated growth rates. So it is not only Europe. Probably not for you if you want only Europe.

This fund has a 5 star Morningstar review. Zacks Rank 1 (Strong Buy).

1 year return approximately 51%, 3 year 25.5, 5 year 22, 10 year 13.3.
Thanks for mentioning OPGIX. I did know of it as a decent active growth fund but it currently and historically has 0 exposure to emerging Europe....so it's not really relevant to the conversation here.

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