Emerging Markets Strategy

KCM’s EMI Strategy combines several ETFs into a single, coordinated portfolio designed to provide our clients:
Exposure to the world’s emerging markets

•  Active management of exposure to each emerging market country or basket of countries
•  Liquidity
•  Risk reduction through vast diversification
Portfolio Management Process:

KCM employs a combination of quantitative and technical tools to evaluate the ETFs that are employed in the strategy. On a quarterly basis, our process establishes:

•  Which regions are the most attractive
•  Which countries are the most attractive
•  The level of exposure to the core, broadly based ETF that forms the portfolio’s backbone
•  The level of exposure to specific commodities we wish to emphasize now

Intra-quarter, our process may generate signals to make adjustments to the initial holdings. KCM believes that its systematic, disciplined and consistent process limits risk and maintains appropriate diversification. Portfolios can be expected to follow the general track of the MSCI Emerging Markets Index (our benchmark). Our back-tested results since inception (10/31/04), show the strategy has the potential to generate total returns in excess of its benchmark. ETFs typically employed in the strategy are:

•  MSCI Emerging Markets ETF (EEM) as the "Core Holding”
•  Country baskets such as the Latin 40 (ILF) and China 25 (FXI) ETFs
•  Various country ETFs such as S. Africa (EZA), S. Korea (EWY), Brazil (EWZ), Malaysia (EWM), Taiwan (EWT), and Mexico (EWW)
•  Other regional and country specific ETFs as they become available

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Scanning the globe for Emerging Market opportunities

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