Emerging market ETFs continue to lead the U.S.!

This first chart shows a comparison between the Vanguard Emerging Markets ETF (VWO), iShares MSCI Emerging Markets Index Fund ETF (EEM), iShares MSCI BRIC Index Fund ETF (BKF), PowerShares QQQTrust Ser 1 (QQQQ), SPDRs S&P 500 Trust Series ETF (SPY), and the DIAMONDS Trust Series ETF (DIA) from early July 2010.

You can see how VWO and EEM, followed by BKF have been outperforming the US index ETFs particularly over the past month or so. Notice also the acceleration of the QQQQs in the past month relative to the more comprehensive SPY and DIA ETFs. Investors are looking for higher returns by focussing on higher risk markets and stocks.

We can anticipate that this relative strength will continue after some resting period and continuation of the uptrends.

This next chart compares recent performance of some of the leading emerging market ETFs along with the SPY. It compares the SPY with the iShares MSCI Chile Index Fund ETF (ECH), iShares MSCI Hong Kong Index Fund ETF (EWH), iShares MSCI Singapore Index Fund ETF (EWS), iPath MSCI India Index ETN (INP), and SPY.

Again, we see the “riskier” markets of Chile and Peru outperforming Hong Kong, India and Singapore, which are all outperforming the US. Outperformance is also seen in other country ETFs not shown in the chart such as the Global X InterBolsa FTSE Columbia 20 ETF (GXG), and iShares MSCI Thailand Investable Market Index Fund ETF (THD), among others. (www.etf-portfolios.com)