Bespoke - in their weekly Research Report - published every Friday night, had a great graph on what could be a potential bottoming in emerging markets the last few weeks.
This blog has written previously about emerging markets and non-US (here and here, and here). Brazil (NYSEARCA:EWZ) was never repurchased for clients, but the EEM and VWO have been added to in small increments during the 3rd quarter, while a new mutual fund was added to client accounts, i.e., David Herro's Oakmark International Fund. David has an impressive long-term track record, even though the fund is down 15%-16% YTD as of Friday, 10/19/18. Both the VWO and EEM were/are also down 15% YTD as of last Friday. There has been a further flush in EM and non-US just since September 30th, when all three vehicles were down only down 7-8% for the first 9 months of the year.
What's the proper weight in client accounts for EM and non-US? No doubt that varies depending on who you ask, but Emerging Market economies are about 15% of global GDP, with China being the largest share of that chunk. Chinese shares or China ETFs will never be bought for clients directly.
The 10-year bear market in the emerging market asset class ended in Q1 '16. The three-year rolling return for the EEM is 5.5% and the 5-year rolling return for the EEM is just 29 bps.
If the dollar just remains stable and the US-China tariff spat could get resolved, I suspect it would break the EM and non-US open quickly, at a time when everyone is worried about the US market.
Here is the first-ever EM purchase for clients in March 2016.
It's (EM trading action, that is) really all about China. China rose 4% last night.
The above mentioned positions will continue to be added for clients in small positions over the 4th quarter.