American athletes are not the only ones winning big in Brazil, investors in the iShares MSCI Brazil Capped ETF are up 66% year-to-date. Tushar Yadava, investment strategist at iShares, said the ETF’s gold-medal performance has the momentum to continue despite a rash of headwinds. ‘You are starting to see hope for political progress moving forward and growth is returning a little bit in terms of expectations,’ said Yadava. ‘And we are seeing some small upticks and corporate behavior and those things combined make the picture a little bit rosier and suddenly you see a lot of performance after many years of being beaten down.’ The $28 billion iShares MSCI Emerging Markets ETF is up 17% year-to-date, far outpacing the 7% gain in the S&P 500 over the same period. The fund has 7.5% of its assets in Brazilian securities, the fifth largest allocation in the fund behind China (25%), Korea (15%), Taiwan (12%) and India (8%). According to Yadava, the EEM has seen over $6 billion in inflows this year as investors finally see emerging market economies turning the corner after being dragged down by crashing commodity prices and growth scares. ‘Emerging markets have been beaten down for a long time and they have relatively attractive valuations to developed markets that have fallen out of favor,’ said Yadava. ‘And you are also starting to see ROEs and forward earnings expectations tick up a little bit.’ Yadava is also positive on the iShares MSCI India ETF , up 7% so far in 2016, saying the country is finally benefiting from economic reforms and the stabilization of commodity prices. ‘Over the longer term, this is one of the economies with one of the greatest demographic profiles in the world,’ said Yadava. Finally, Yadava said the iShares JPMorgan USD Emerging Markets Bond ETF , up 11% thus far in 2016, could continue to see gains in 2016, despite rising concerns about an overextended debt market.
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