Will Emerging Markets submerge again? Claymore's new ETF

Jon Chevreau said:

Claymore Investments has just unveiled its new Broad Emerging Markets ETF, to go with its pre-existing BRIC ETF, which of course was focused just on Brazil, Russia, India and China. The fee is higher than the equivalent Vanguard fund but it's hedged back into the Canadian dollar.

I know Emerging Markets got hammered more than most regions in the last 6 months but my impression is it's a region that may also recover more robustly if and when a recovery is enduring. The long-term growth story is well known but perhaps overly hyped?

Details in my blog today:
http://network.nationalpost.com/np/...ymore-unveils-broad-emerging-markets-etf.aspx

Click to expand...

I think it is great that Claymore is out with the first broad market emerging market ETF in Canada. But I have minor quibbles as I note in today's post on the blog.

While a good case can be made that emerging markets will experience rapid economic growth, it remains to be seen if such growth will translate into excellent stock market returns. Still, a market weighting of emerging markets in proportion to their float-adjusted market capitalization is certainly warranted. But I expect that this will remain a very volatile asset class.

If you've decided you DO want that market allocation to EM, the question you have to pose is whether the extra cost of the Claymore version vis a vis Vanguard is worth it in order to get the currency hedged back into C$. Usually, Claymore takes the position that it hedges back single-country funds like Japan or the U.S. The argument used to be that broad-based ETFs covering EAFE or now Emerging Markets are diversifying the currencies just by virtue of being in so many different countries.

So from that perspective, I find a currency hedged broad Emerging Markets ETF to be a bit strange. And not all that cheap if you buy the Advisor version.