Philippines ETF: Can the Run Continue? - ETF News And Commentary
01 Marzo 2013 - 1:15PM
Zacks
In 2012, Philippines ETFs turned out to be one of the best
performing ETFs greatly outperforming the broad emerging market
benchmarks. A combination of strong domestic market along with
higher public spending provided a boost to the economy (2012 Was
Forgettable for These Emerging Market ETFs).
In fact, the economy remains a top choice for firms looking for
outsourcing at a relatively cheaper cost as the region has a large
and young population base. The government is continuously striving
to strengthen the economy with growth heavily dependent on industry
and investment drivers.
The robust economic growth rate in the Philippines is ample
proof of its economic strength. The 6.6% growth rate clocked
in 2012 easily exceeded the government’s 5-6% growth expectation
for the economy.
The government expects to sustain the growth momentum in 2013
through public-private partnerships for infrastructure
investments.
For 2013, the improvement in the growth rate would also be
accompanied with a low level of inflation. Lower inflation will
allow interest rates to remain low thereby leading to a positive
business environment (4 Best ETF Strategies for 2013).
The global downturn also failed to shake the Philippines
economy. Government measures continue to stimulate
domestic demand in order to set off the negative impact from weak
export.
The central bank of the country had cut the interest rate four
times in 2012, bringing the level to its historic low of 3.5%. This
further improved domestic demand and helped the economy to maintain
its growth.
Additionally, the manufacturing and construction sector of the
economy appears to be well poised for growth in 2013. The economy
also seems to benefit from tourism and the strength in its consumer
and service sector (Can Anything Stop These Southeast Asia
ETFs?).
Moreover, the Philippine Stock Exchange index seems to reap the
benefit of this healthy growth environment. The Index started the
year on a strong note and rallied to post new highs. Going
forward, the Index appears to be on the brink of attaining fresh
records.
However, the rising peso against the U.S. dollar makes exports
expensive from the country. Also, it may hamper the dollar
dependent sectors like manufacturing, overseas Filipinos along with
BPOs and the service sector.
Overall, it seems that the Philippines has been one of the very
strong performers among the emerging markets and still appears to
be well poised for further growth. In such a scenario, investors
who are looking to capitalize on the growth prospects of the
economy can invest in a portfolio of stocks instead of taking the
risk of investing in a single security (Philippines ETF: A Rising
Star in Emerging Market Investing).
In this context, our top choice to track the economy would be
the MSCI Philippines Investable Market Index Fund
(EPHE) which currently has a Zacks ETF
Rank of 1 or ‘Strong Buy’.
The fund tracks the MSCI Philippines Investable Market Index,
which looks to offer investors broad exposure to equities listed in
the Philippines (Do Corrupt Countries Make for Great ETFs?). The
fund was debuted in Sep 2010 and since then has been able to build
an asset base of more than $300 million.
The ETF which is one of the top performing funds in emerging
market ETFs trades at a volume of more than half a million shares a
day.
The performance of the ETF has been quite remarkable. This ETF
added a whopping 45.49% in 2012 and continues with its
outperformance in 2013 as well.
In fact, it is trading near its all-time high since its launch
and has been recording double-digit gains for its investors. The
fund has gained an impressive 14% in the year-to-date period.
Meanwhile, the yield of the fund stands at 0.71% while costs
come in at 60 basis points a year (Emerging Markets Dividend ETFs
for Income, Growth & Diversification).
Currently, the product has just over 42 securities in its
basket. The maximum sector exposure is to Financials (42.3%),
Industrials (24.38%), and Utilities (10.0%).
Investors should note that the fund is concentrated in the top
10 holdings with more than 55% of investment. Among individual
holdings, SM Investments Corp, Ayala Land and SM Prime Holdings
take the top three positions with 10.3%, 8.28% and 6.19%,
respectively, of EPHE’s assets.
Clearly, despite the heavy financial exposure, the product has
not been hampered by the European crisis, suggesting it could be an
interesting choice for those looking for an ETF that is not heavily
correlated to the euro zone, which still has the chance to be a
strong performer.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30
Days. Click to get this free report >>
ISHARS-MS PH IM (EPHE): ETF Research Reports
To read this article on Zacks.com click here.
Zacks Investment Research
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days. Click
to get this free report
Grafico Azioni iShares MSCI Philippines (AMEX:EPHE)
Storico
Da Ago 2024 a Set 2024
Grafico Azioni iShares MSCI Philippines (AMEX:EPHE)
Storico
Da Set 2023 a Set 2024