Jim Rogers, the legendary investor best known for his commodity prowess, books, and work with the Quantum Fund, is back in the news discussing his latest investment picks. Per usual, Jim Rogers is looking at emerging markets, and also to nations that have been beaten down and could be compelling values for risk-tolerant investors.
This is an interesting strategy, particularly given that U.S. markets are still near all time highs, and many investors seem worried about the near term outlook for United States stocks. However, many emerging markets are nearly off-limits to U.S. investors as there are only a handful of ADRs from each nation which currently trade on American exchanges (Read Focus on These China ETFs for Outperformance).
Fortunately, there are several ETFs targeting some of Jim Rogers’ favorite investment destinations, and these can provide more diversified exposure to developing nations than what many retail investors can currently achieve on their own. Below, we have highlighted some of the ETFs that focus on Jim Rogers’ preferred targets right now for those who wish to invest like the famous investor in their own portfolios:
Yost Partners was up 0.8% for the first quarter, while the Yost Focused Long Funds lost 5% net. The firm's benchmark, the MSCI World Index, declined by 5.2%. The funds' returns outperformed their benchmark due to their tilt toward value, high exposures to energy and financials and a bias toward quality. In his first-quarter letter Read More
Thanks to the ongoing turmoil in Russia and the West’s growing displeasure with Putin, stocks in Russia have faced severe pressure as of late. Currency issues haven’t helped matters either, sending ruble denominated investors sharply lower in the process.
However, this kind of a slump is exactly what Jim Rogers is looking for as he is hunting out deep value positions in beaten down and unloved markets. It also doesn’t hurt that Russia has a lot going for it if it can skate past these geopolitical issues as it has huge hydrocarbon reserves and little debt.
“I know your parents taught you to buy low and sell high. Russia is hated. It’s probably the second-most hated after Argentina,” said the legendary investor to Maria Bartiromo on FOX Business Today. “It’s got vast natural resources. It’s got a freely convertible currency. I don’t see any reason not to step in where there’s blood in the streets.”
Russia ETF in Focus
Easily the most popular ETF tracking the Russia market is the Market Vector Russia ETF Trust (NYSEARCA:RSX) (ETF report). This fund has close to $1.5 billion in AUM while its average daily volume is approaching 6.5 million shares a day (read Is It Time to Flee Russian ETFs?).
As you might expect for a fund focused on Russia, the ETF is heavily concentrated in energy and basic materials names, as these account for, respectively, 43% and 17% of the total assets. The giants of Gazprom and Lukoil take the top two spots and combine for roughly 15% of assets in this ETF.
RSX is down about 12% in the YTD time frame, though it has made a bit of a comeback in the trailing one month, adding about 10%. This volatile fund could be an interesting choice for those seeking a relatively beaten down emerging market play, though more sanctions or tensions with the West could definitely derail this ETF in the near term.
It wouldn’t be much of a Jim Rogers article if we didn’t also touch upon China. Jim Rogers has been a bull on China for quite some time and his recent flurry of interviews was no different (see China ETF Investing 101).
Once again, Jim Rogers discussed his long term bullishness on the country and how they are poised to become a superpower. However, Jim Rogers also did temper his optimism with a bit of caution over the country’s debt load, though he was also pleased with some of the recent reforms that were announced in the nation.
In particular, Jim Rogers focused in on the State Council’s decision to liberalize some areas of China’s financial market such as in terms of the rules governing IPOs and foreign ownership. Jim Rogers said he isn’t buying a whole lot of shares in China, but he is doing it ‘especially in finance’ according to an interview with the Daily Ticker on Yahoo.
Thanks to some products that have a sector focus in China, investors can now tap directly into the financial segment with the Global X China Financials ETF (NYSEARCA:CHIX) (ETF report). While this is a concentrated play, it is a bit unpopular with investors as it has under $20 million in assets and a relatively low average daily volume.
Still, it is an interesting choice to focus on one of Jim Rogers’ favorite segments (right now) in China. The fund has about 40 stocks in its basket, with banks dominating the holdings at just over 50%. Real estate takes up another 25% of assets, followed by insurance at 21%, suggesting a relatively spread out profile.
CHIX has also seen rough trading so far in 2014, as the fund is down about 8.5% in the time frame. The product is pretty much flat over the trailing month, though this is obviously more of a long term play (see China ETFs Rise on Financial Sector Strength).
Investors should also note that the most popular China ETF, the iShares FTSE/Xinhua China 25 Index (ETF) (NYSEARCA:FXI ) (ETF report), also has a significant focus on the financial sector. In fact, the product puts close to 50% of its assets in the space.
This means that FXI, while also a broad play, might be heavily influenced by any changes in the financial sector as well, making it an interesting choice for investors who want a more liquid play than CHIX. Either way, any of the above mentioned ETFs could make for interesting picks to match Jim Rogers’ recent bullish calls on both the changing Chinese market, and beaten down stocks in Russia.
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