Recently, I am thinking about buying EMVL (iShares Edge MSCI EM Value Factor UCITS ETF listed at LSE).
The ETF tracks MSCI EM Select Value Factor Focus Index.
Reasons:
1) Regression to the mean.
As at Feb 2023, its 5-year and 10-year annualised return is -1% and +1%. Since Dec 29 2000, its annualised return is however 9.5%. I am guessing that emerging value will do better in next 10 years, given its abysmal return in last 10-years.
(On seperate note, I am guessing that the US market may provide lower returns in 2020s, compared to the emerging markets. Because US has stellar returns in 2010s.)
2) Its value multiples are interesting. Based on index factsheet, its dividend yield is 8%, forward P/E is 5.6 and P/BV is 0.7.
3) Surprisingly, TSMC and Tencent are in its top 10 holdings
Of note, extracted from the index factsheet:
The MSCI Emerging Markets Select Value Factor Focus Index is rebalanced on a semiannual basis, usually as of the close of the last business day of May and November, coinciding with the May and November SemiAnnual Index Reviews (SAIRs) of the MSCI Global Investable Market Indexes.
I will wait and see for now. Given the current interest rate environment (~4% in T-bills or IBKR account), the safest is still cash and there is some opportunity cost in deploying cash to buy shares.
