Tuesday Tidbits

There is a good article from Bloomberg about whether investors are better off with active or passive management in emerging markets with iShares MSCI Emerging Markets Fund (EEM) being the proxy for passive management. The general take away is that passive is better than active but that seems like the type of thing where the data could be mined either way.

As a recurring theme I think a combo of different things is the best way to go. Broad-based exposure is probably right for a big chunk of a do-it-yourselfer's emerging market exposure. However I would not rule out a narrow idea or two; either an individual stock or a fund of some sort that is single country or regional.

If a do-it-yourselfer allocates 6% to emerging markets it does not seem like a stretch that this person could pick one narrower idea to study, learn and then buy.

For a while I have been writing that I thought that in the next few years Vietnam and Pakistan would be lifted into a similar echelon as the BRIC countries. Turns out some other folks have had similar thoughts according to this article from New Zealand. Goldman Sachs JB Were in Australia has a term called N-11 which stands for the next eleven after the four BRICs. The N-11 countries are Mexico, Korea, Bangladesh, Egypt, Indonesia, Iran, Nigeria, Pakistan, the Philippines, Turkey and Vietnam.

That group of countries represents opinion from JB Were. It is not clear to me that these are necessarily the best eleven in sum but this ties in with some of the recent posts about frontier investing. As it is with investment products so it is with these economies; they continue to evolve socially and as investment destinations. I think it is worthwhile to devote time to these types of places.

One reader left a comment about too many of the new ETFs being for commodities and emerging markets. I am not sure whether this is correct or not but either way it is true that brokerage firms and the like to tend to create more products geared to a certain part of the market closer to a top than a bottom.

The thing I would say about this is that just because there are several funds to invest in alternative energy type stocks does not mean you increase your position beyond what you currently own, if you own any and BTW I do not.

If you allocate 5% to commodities; five new products give you more choices for your 5%. The investment companies might be trying to time something but you don't have to.