The Freedom 100 Emerging Market Index is gaining attention as it shifts focus towards Taiwan, Chile, South Korea, Poland, and Brazil. These stocks account for an impressive 75% of the fund. Managed by Life + Liberty Indexes, founded by Perth Tolle, this index has become a significant player in the global market landscape. Meanwhile, the iShares Eurozone ETF has reported a 6% increase over the same period, highlighting the appeal of foreign markets compared to the relatively stagnant performance of U.S. stocks.
Emerging markets are notorious for their volatility and unpredictable regulatory environments. Investors often hesitate to engage in these markets due to concerns about political instability and economic unpredictability. Perth Tolle remarked on the challenges, stating:
"One of the reasons why people don't invest in emerging markets is that they're full of autocracies, people don't want to support terrorism or support things that go on in these countries that aren't free." – Perth Tolle
Despite these challenges, certain emerging markets are outperforming expectations. For instance, Hon Hai, known as Foxconn in the West, holds a 3% position in the Freedom 100 Emerging Market Index, paralleled by SK Hynix and Latam Air. In contrast, the iShares China Large Cap ETF surged approximately 16%, showcasing its strength against U.S. counterparts.
The iShares MSCI Emerging Markets ETF, which tracks a broader range of emerging market stocks outside China, is also up nearly 6%. Even as emerging markets thrive, the iShares MSCI India ETF has seen a decline of about 1.5% since President Trump took office for a second term. This coincided with Indian leader Narendra Modi's visit to the White House and discussions on reciprocal tariffs, which aimed to address trade and tariff issues between the two nations.
The U.S. market has shown limited growth, with the Dow Jones Industrial Average barely maintaining positive returns over the past month. The Invesco QQQ ETF rose approximately 2.5%, while the KraneShares CSI China Internet ETF experienced a substantial gain of around 20%. The S&P 500 increased slightly over 1% since January 20, whereas the MSCI China ETF boasted a robust 17% rise.
The iShares Eurozone ETF grades stocks from various countries based on their investability using 86 variables such as "freedom of movement and capital," "rule of law," and "personal economic freedom." This comprehensive approach ensures that investors gain confidence when entering these markets.
Perth Tolle highlighted India's potential:
"They're a consumer-driven economy and their population just surpassed China, and it's a highly educated English-speaking population, so their demographics are very favorable." – Perth Tolle
Despite India's promising outlook, tariffs remain a concern for investors. Tolle expressed skepticism about their impact:
"Any kind of constraint on an economy like a tariff is negative in our view." – Perth Tolle
The emphasis on companies in emerging markets being free to prioritize their interests over state interference resonates strongly with investors. As Tolle noted:
"We want companies in emerging markets that are free to put their own interests ahead of the state." – Perth Tolle