The funds tend to rally in the months of March and April
It's been a volatile month for U.S. stocks so far, with the S&P 500 Index (SPX) enjoying both its worst and best weeks in more than a year -- sending up a rare stock market signal we haven't seen since 2001. Echoing that, after dropping yesterday on concerns about Federal Reserve rate hikes, the major U.S. indexes are back in the black today. Outside of the U.S., though, a handful of foreign exchange-traded funds (ETFs) could be on the cusp of big gains, if past is prologue.
Emerging Markets ETF Tends to Shine in the Spring
The iShares MSCI Emerging Markets ETF (EEM) offers exposure to large- and mid-sized companies in emerging markets, including China, South Korea, and Taiwan. After skimming the $34 level in late 2016, EEM shares rallied more than 50% to their Jan. 26 nine-year high of $52.08. The ETF then pulled back with the broader equities market, but found support atop its 200-day moving average -- in the vicinity of a 23.6% Fibonacci retracement of the aforementioned rally. EEM is now trading around $49.30, up 1% on the day.
Since inception, the emerging markets fund has rallied 3.1% in the month of March, according to data from Schaeffer's Quantitative Analyst Chris Prybal. That marks the ETF's best month of the year, historically. Taking runner-up is April, where EEM has added another 2.6%, on average. From current levels, a 3.1% gain next month would place the shares around $50.83, and an additional 2.6% bump would have EEM trading around $52.15 --a new 11-year high.
EPI Approaching Best Month of the Year, Historically
The WisdomTree India Earnings Fund (EPI) offers exposure to "profitable companies in the Indian equity market." Similar to EEM, EPI shares rallied more than 50% from their late-2016 lows to their late-January peak of $29.52, before pulling back with the broader stock market. The fund found support in the form of its uptrending 160-day moving average, and was last seen 0.3% higher at $26.94.
The ETF is on the verge of its own best month of the year, historically, averaging a 4.6% gain in March, since inception. A similar surge from current levels would place EPI around $28.18. The shares have gone on to enjoy a 3% April rally, on average; a similar pop would then put the Indian ETF around $29.02 -- within a chip-shot of new highs.
Will NAFTA Uncertainty Overshadow Seasonality for EWW?
The iShares MSCI Mexico Capped ETF (EWW) has endured a rockier year than most other funds, amid concerns that President Trump will pull out of NAFTA. After topping out at a two-year high of $57.82 in late August, EWW staged a retreat, ultimately finding support in the $48 area -- a 61.8% Fibonacci retracement of the fund's 2017 low to high. At last check, the ETF was trading at $51.96, up 2.1% on the day.
Although uncertainty about NAFTA is still in the air, it's worth noting that the Mexico-centered ETF tends to rally in a big way in March. The fund has averaged a monthly gain of 5.1% since inception -- more than double the second-best month of the year (December). That's followed by an average April gain of 1.9%.
From current levels, another 5.1% boost next month would put EWW around $54.61 -- near its 2018 highs. A subsequent 1.9% uptick would then have the ETF around $55.65, in territory not explored since September.
Turkey ETF Could Explore 3-Year Highs
Finally, the iShares MSCI Turkey ETF (TUR) had a rough fourth quarter, shaken up by Turkey's deteriorating relations with the U.S. and the high-profile trial of Turkish banker Mehmet Hakan Atilla. By late last month, however, the ETF had clawed its way back to within inches of annual-high territory, peaking just north of $46 -- a familiar area of resistance -- before retreating with the broader stock market. TUR was last seen 1.1% higher on the day, trading at $44.43.
TUR's upcoming two-month stretch is the best of all four ETFs discussed today, historically. The shares have averaged a March gain of 7.6%, since inception -- another rally of that magnitude would place them around $47.81 -- a neighborhood not charted since mid-2015. What's more, TUR averages an even healthier gain of 8.6% in April. That would put the fund around $51.92, if history repeats -- a three-year high.