Published: October 28, 2009
The
correct answer is
(D.) Peru
That's right: Peru. The little
country that gets no attention has
trumped the rest of the world in
2009, and investors who were smart
enough to get on the bandwagon early
are now feeling as high as the Andes
peaks.
In fact, most investors who went
into emerging markets are feeling
the high. The benchmark MSCIBarra
Emerging Markets Index is up +60%
year to date --almost four times as
robust as the S&P 500. And that's an
average. Individual emerging markets
have topped those gains. Though Peru
sits at the top of the leaderboard,
with year-to-date returns of +114%,
Russia comes in formidable second
with +94% gains. Indonesia's +80%
surge is a close third while India's
+73%, Brazil's +61%, and Shanghai's
+56% also rank among the best
performing major emerging markets
this year. These gains dwarf the S&P
500's +16% or the MSCI EAFE global
benchmark's +25% year-to-date
returns.
What's especially great about this
trend is that the amazing
outperformance of at least some of
these markets is likely more than a
flash in the pan. Emerging markets
account for more than 40% of the
world's population and nearly a
third of its gross domestic product
(GDP). The International Monetary
Fund even forecasts that emerging
markets will account for all the
growth in the global economy this
year and most of the growth in 2010
as well.
So how can an income investor profit
from this growth story? And are
emerging market equities too hot for
S.W.A.N. investors -- investors who
want to "sleep well at night"? After
all, emerging market equities aren't
for everyone -- historically, they
have tended to take back their gains
as quickly as they gave them.
StreetAuthority editor Carla
Pasternak answers these questions in
her latest edition of the
High-Yield International
newsletter.
In her search for a relatively safe
way to play emerging markets, she
shifted the focus to select
countries that aren't as highly
levered to volatile commodities or
export markets as Peru or Russia.
Instead, Carla looked for domestic
growth stories and diversified
economies that provide a relatively
stable backdrop for their capital
markets in the months and years
ahead. What she found were a series
of funds and equities that mitigate
risk effectively and pay hefty
yields to boot. It's a great way to
put the world in your pocket. To
learn the names of Carla's picks,
and to learn more about
High-Yield International,
please visit this link.
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