MINTS Emerging Market ETFs Outperform
Do you remember hearing about that new and exciting investment opportunity in the early 2000s? The opportunity was in BRIC countries. You know, Brazil, Russia, India, and China. Those areas went on to make a fortune!
Well, a decade later, we’re looking at another opportunity. This time it’s called MINTS.
MINTS is the new acronym being used by Wall Street. It identifies rapid growing countries in Asia. The countries are Malaysia, Indonesia, New Zealand, Thailand, and Singapore.
These oceanic countries were lumped together for one reason… they’re closely tied to the rapidly growing countries in Asia.
Believe it or not, each of these single country ETFs beat the overall market in the recent downturn.
The massive two week correction we just experienced shaved 18.8% off of the S&P 500’s highs. The MINTS ETFs lost as well, but not nearly as much as the overall markets.
There are two main reasons for their market beating performance.
First, these emerging markets countries are all growing rapidly. Why? Because their economies are all closely tied to China, India, and Japan.
Malaysia, for example, is expected to grow GDP by 5.5% this year. Right now, they’re Japan’s third largest trading partner. And according to the IMF, their unemployment is 3.6% and they have low inflation.
Another great example is Indonesia. Their economy is poised to grow 6.2% this year. And their largest trading partner… who else but China. In fact, Indonesia is currently China’s third largest trading partner.
And the rest of MINTS are rapidly growing too…
Thailand looks to add 4% to their economy in 2011, Singapore will grow by 5.2%, and New Zealand will add 0.9% (remember, New Zealand has been plagued by massive earthquakes in the past year).
While growth is important, it’s not the only thing driving economic growth…
The second reason these ETFs will continue to outperform the markets… the MINTS have an exchange rate advantage on their trading partners.
As export nations, these countries have seen huge gains from improved exchange rates. Here’s why…
The countries buying goods from the MINTS nations have seen their currencies appreciate. In the past year, the Chinese Yuan, Indian Rupee, and Japanese Yen have all risen substantially.
And the main benefit of a strong currency for these powerhouse countries is more purchasing power. They can simply import more and more goods from the MINTS countries. And the more they import, they more the MINTS countries will prosper.
Don’t forget, since the MINTS countries are trading with countries whose currencies are up, they have a built in price advantage. That means customers get better deals importing goods from the MINTS. It sounds like a recipe for success to me…
A strong foreign exchange benefit, combined with an already strong growth cycle… will lead to an economic prosperity for the MINTS economies.
If you’re looking for the next big move in emerging market funds, the MINTS are poised to grow. Consider gobbling up some of these tasty ETFs for your portfolio…
Category: ETFs
