Another ETF filing with a hat tip to IndexUniverse.WisdomTree has filed for the Middle East Dividend Fund that will include Bahrain, Dubai, Egypt, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar and the United Arab Emirates.
The prospectus has no info on country weightings (none that I found anyway) but surprisingly 54% of the companies have market caps greater than $2 billion.
WisdomTree has an awful lot of very interesting funds on the shelf that I'd love to see list but thus far have not. Some of the filings are so old now that I doubt they will list so we'll see if this middle east fund ever lists or not.
One thing seems pretty clear to me, frontier markets will open up to investors one way or another pretty quickly. PowerShares has a frontier fund in the works which takes in a few other countries but given the role of middle eastern countries and investment funds are now playing on the global stage a narrower fund like the one WT filed for is inevitable even if it is from another provider.
As I was working on this post the following comment came in on this morning's post that deserves a follow up.
I sure wouldn't attempt the kind of sophisticated trades that you're positing. For me, it's just enough to know that they're out there if I ever get to that point.
I mentioned the potential of trading the spread between platinum and gold or AUD/NZD. No argument from me on the reader's point. I would add though, is that a dynamic exists between many different things like Oz and New Zealand. As it becomes possible to more easily trade off of these dynamics means that people will submit articles to places like Seeking Alpha. And while you may never trade AUDNZD via ETFs you might equity exposure to Australia and understanding the dynamic might make you more knowledgeable about the country you own.
Now apply that to other exposures in your portfolio like maybe gold.
4 comments:
Roger - off topic, but what are your thoughts on closed end funds? Thinking about buying some muni closed end funds selling at pretty big discounts. Just curious about your thoughts on these, versus ETFs or mutual funds.
Last night I read an excerpt from Fareed Zakaria's new book, The Post-American World, in Newsweek magazine. While it's not an investing book, it obviously has HUGE implications for structuring one's portfolio. The Middle East Dividend Fund might quickly find a niche in my portfolio.
CEFs; part of the decline, IMO, is from the dislocation in fixed income markets. it is not clear to me that thre is not more to come that could impact CEFs.
Anyone interested in the Zakaria excerpt can check it out here.
Roger,
You've consistently advised appropriate diligence when investing, but with foreign exposure it's difficult to know when enough's enough.
The AUD/NZD spread is a good example. I lived in New Zealand for 2.5yrs and came to understand something of the relationship between the two countries.
While one might feel comfortable trading the spread technically, or even if the point of the trade was to respond to macro events (respective Reserve Bank rate changes, unemployment levels, etc), it would be fairly risky to appreciate in real time some of the more local events that could drive the relationship (changes in numbers of Kiwi's living in Aus, local tax preferences (Aus), corporate ownership, price of wool, price of lumber, dairy subsidies etc etc etc).
When I was living there, I saw the Asia currency crisis unfold in real time; there was a noticeable lag to the reaction on Wall Street - and an even greater lag to the little guy investor (me, today!).
How do you assure yourself that you are doing enough diligence and are aware of those key issues that might impact your position? (I'm thinking of your recent experience with Iceland...)
I may have been reading too much gloom and doom on the Shedlock site but I can't help but think that when it comes to middle eastern exposure, and Romanian exposure, and even - despite my personal experience - Kiwi/Aussie exposure, I'd always be pretty near the center of the "dumb money". Not my preference.
Thoughts?
Rick
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