Will 2012 Be a Comeback Year for Risky Assets?
February 16, 2012
Last week John Derrick appeared on FOX Business to discuss the strong rebound in emerging markets so far in 2012 with Charles Payne. John explained that the global markets are currently in the early stages of a new easing cycle that began toward the end of 2011.
John said central bankers and government officials are focused on increasing economic activity through policies such as low interest rates and higher money supply growth rates. Riskier assets such as emerging market equities and commodities have historically benefited from this type of environment.
However, investors must be aware that these global assets can carry risk in several different forms. Specifically, John and Charles discussed Russia, a country that poses some political risks. John highlighted many of the points I discussed in my posting on Monday. Mainly, the recent setback of Putin’s United Russia party in the country’s parliamentary elections is a positive development for the political climate. In addition, political opposition to the status quo has grown louder, which is a positive sign that the Russian people have more freedom to speak their mind.
Russia is the largest country allocated in our Eastern European Fund (EUROX), co-managed by John and Tim Steinle. With Russia set to benefit from today’s high energy prices, the team believes that Russia could lead a bounceback for emerging markets in 2012.
More on Russia and Eastern Europe:
- There’s Value in Russia’s Future
- Eastern Europe Financial House Stronger than Debt-Ridden Neighbors
- After 2011 Hit, Are Emerging Markets Set to Recover First?
|One-Month||One-Year||Three-Year||Five-Year||Ten-Year||Gross Expense Ratio|
|As of January 31, 2012||12.84%||-19.28%||25.85%||-6.57%||14.90%||1.91%|
|As of December 31, 2011||-8.68%||-27.94%||15.02%||-9.04%||14.43%||1.91%|
Expense ratios as stated in the most recent prospectus. Performance data quoted above is historical. Past performance is no guarantee of future results. Results reflect the reinvestment of dividends and other earnings. Current performance may be higher or lower than the performance data quoted. The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Performance does not include the effect of any direct fees described in the fund’s prospectus (e.g., short-term trading fees of 2.00%) which, if applicable, would lower your total returns. Performance quoted for periods of one year or less is cumulative and not annualized. Obtain performance data current to the most recent month-end at www.usfunds.com or 1-800-US-FUNDS.
Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc.
Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. By investing in a specific geographic region, a regional fund’s returns and share price may be more volatile than those of a less concentrated portfolio. The Eastern European Fund invests more than 25% of its investments in companies principally engaged in the oil & gas or banking industries. The risk of concentrating investments in this group of industries will make the fund more susceptible to risk in these industries than funds which do not concentrate their investments in an industry and may make the fund’s performance more volatile.
The MSCI Emerging Markets Total Net Return Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in emerging market countries on a net return basis (i.e., reflects the minimum possible dividend reinvestment after deduction of the maximum rate withholding tax).
All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. BRIC refers to the emerging market countries Brazil, Russia, India and China. Holdings in the Eastern European Fund as a percentage of net assets as of 12/31/2011: iShares MSCI Emerging Markets 0.00%.