ETF Talk: Indonesia is an Interesting Asian Alternative

For the past 50 years, many Asian countries have risen swiftly in world economic rankings. Among these is the archipelagic nation of Indonesia, which ranked #38 on this year’s list, compared to #50 in last year’s rankings. Indeed, my colleague Nicholas Vardy recently noted in his Global Guru column that Indonesia has become the most improved G20 economy since 2006. If you wish to capitalize on this rise, you may want to consider the Market Vectors Indonesia Index ETF (IDX).

This non-diversified fund seeks investment results which, before fees and expenses, match the performance of an index which tracks Indonesian companies. For the purposes of the index, and thus for IDX, a company is considered an “Indonesian company” if it is incorporated in Indonesia and/or generates at least half of its revenues in the island nation.

Year-to-date, the fund has moved downward due to a disastrous August, but this situation offers a potentially advantageous entry point for investors willing to take some risk. IDX has recovered swiftly from similar drops in recent years, and this ETF managed a small gain in 2012 as a result of such resurgence. For investors interested in capturing income, IDX offers a dividend yield of 2.17%.

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