US ETF market ushers in active investing in India, Brazil stocks

economictimes.indiatimes.com:

Brazil and India as the markets least vulnerable to the turmoil in emerging markets now have the opportunity to buy stocks in those countries via actively-managed exchange-traded funds. The Global X Brazil Active ETF and Global X India Active ETF both launched Friday amid increased clamor for Brazil as it embarks on interest-rate cuts and for India as it overtakes China as the world’s fastest growing major economy.

The new funds, whose tickers are BRAZ and NDIA respectively, come at a time emerging-market volatility has spiked in the backdrop of an economic meltdown in China, debt distress across Africa, war in eastern Europe and political turmoil in Latin America. While passive funds tracking indexes in the two countries have proved popular for long, active managers have always sought to highlight how tracking indexes missed out on a large portion of those sprawling markets valued at $3.6 trillion in Mumbai and $810 billion in Sao Paulo.

High conviction trading ideas often emerge in these countries among companies not included in the big indexes, which are dominated by state-run companies in Brazil and conglomerates in India, said Malcolm Dorson, who will co-manage the portfolios with Paul Dmitriev. “Some passive ETFs haven’t always been able to beat their benchmarks, whose characteristics create an atmosphere where active management is paramount and helpful,” said Dorson.

“We aim on having a high-conviction portfolio of 20-30 names, with significant research behind them.” Brazil’s Ibovespa is up almost 5% this year, gaining five times as much as the MSCI Emerging Markets Index. India’s Sensex is also outperforming with a 6.8% advance.