PowerShares MENA Frontier Countries Portfolio experienced a jump in volume, as well as price, in its second day of trading yesterday. With almost 200,000 shares on the tape Thursday, PMNA looks like it is off to a strong start.
PowerShares Momentum Tracker, a member of Fidelity Independent Adviser’s family of publications, profiled PMNA in this week’s issue. Don Dion, publisher of ETF Momentum Tracker, and Chief Investment Strategist for Dion Money Management, noted that “with high returns and a low correlation to existing global markets, frontier marketplaces have become increasingly popular among investors.”
Since its debut on March 9, 2006, PowerShares Momentum Tracker’s portfolio has returned 3.93% net of fees. During the same period the S&P 500 lost 2.17%, while the Nasdaq lost 0.66%. Dion’s flagship publication, Fidelity Independent Adviser, was recently named by Mark Hulbert as a top-ten performer for adjusted risk returns.
Hailed as the next generation of emerging markets, promoters of frontier markets have been suggesting that this new generation of investments could offer BRIC-like returns in the years to come. While the U.S. continues to sweat under the strain of credit concerns, fund issuers have begun to explore increasingly remote regions of the globe, looking to create opportunities for investors to diversify their portfolios back home.
PowerShares Momentum Tracker took a serious look at the new fund this week, noting how PMNA may stand apart from similarly themed funds, due to the number of companies represented in the portfolio and the fund’s more regional concentration.
“While PMNA’s portfolio does not include all the countries that fall under the definition of ‘frontier,’” Dion said, “its concentration offers investors good exposure to the regions advertised.”
One nation that Dion believes PMNA captures well is the United Arab Emirates.
PMNA’s index offers exposure to the UAE through allocations in Dubai and Abu Dhabi. As of June 30, investment in the United Arab Emirates accounted for 19.04% of the fund’s portfolio, making it PMNA’s second-largest country allocation. Dion notes that “The UAE has experienced an influx of publicity in the last several years and has remained an example of the Middle East’s potential beyond oil.”
While PMNA is not currently included in PowerShares Momentum Tracker’s universe of funds, another emerging markets fund, FR Emerging Markets (PXH) holds the 30th spot on the International Momentum Table.
“We will continue to provide subscribers with the latest information in the growing ETF market,” Dion said, “knowledge will sustain our investors during this difficult time in the economy.”
3-Year Index Risk/Reward Comparison
Period NASDAQ OMX Middle MSCI Emerging
East North Africa Index Markets Index*
2008 YTD* 1.26% -10.99
2007 45.31% 39.39
2006 -20.83% 32.17
**MSCI EAFE NDTR_D
Top 10 Holdings*
Arab Bank PLC 6.62% Emaar Properties 6.08% Mobile Tel. Co. (MTC) K.S.C. 5.65% Orascom Telecom Holding 4.48% Industries Qatar Co. 4.47% Kuwait Finance House K.S.C. 3.67% Orascom Const. Ind. S.A.E. 3.59% Banque Marocaine du Commerce Exterieur 3.33% Nat’l Ind. Grp (Holding) S.A.K. 2.93% Maroc Telecom 2.80%
*As of 6/30/08
PowerShares Momentum Tracker is a member of Fidelity Independent Adviser’s family of financial publications. With more than 70,000 subscribers in the United States and 29 other countries, Fidelity Independent Adviser publishes four monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.
Publisher Don Dion is also president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Massachusetts, Dion Money Management manages more than $720 million in assets for clients in 49 states and 11 countries. A licensed attorney in Massachusetts and Maine, Mr. Dion has more than 25 years’ experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.