In The Face Of Tapering, Poland ETFs Push Higher

Over the past month, the list of the worst-performing ETFs reads like a who's who of emerging markets funds. What might surprise some investors is the list of top-performing non-leveraged ETFs over the past month also includes a few emerging markets funds.

The iShares MSCI Poland Capped ETF (NYSE:EPOL) and the Market Vectors Poland ETF (NYSE:PLND) are among that group with one-month returns of 3.5 percent and 4.2 percent, respectively. Those numbers exclude the more than two percent gains those ETFs are sporting during Thursday's U.S. trading session.

EPOL and PLND, which have about $353 million in combined assets under management, have also stood tall in the face of tapering chatter. PLND, the smaller of the two ETFs, has surged 8.5 percent May 22 when the Federal Reserve indicated tapering of quantitative easing at some point this year is a real possibility.

"As for Fed tapering, I believe investors are picking countries with less financing needs," said Generation Systematic Solutions Portfolio Manger Bartlomiej Fraszczyk in an email exchange with Benzinga. Existing clients of the firm have some allocations in EPOL.

Fraszczyk noted that Poland recently posted a quarterly current-account surplus and that "Polish exports rose by 8.2% from a year earlier in June, this should help narrow the annual current account deficit vs. previous year."

There is something to the notion that global investors are expressing a preference for countries with narrowing account deficits or surpluses. Among the worst-performing emerging markets ETFs this year India and Indonesia funds. Those countries are currently afflicted with widening account deficits.

Generation Systematic Solutions, in collaboration with HDFC Asset Management and IIFL Global, launched the Strategic India Fund earlier this year. Fraszczyk notes the fund has been in cash since its launch date, enabling it to outperform Indian benchmarks and rival funds.

Poland ETFs are benefiting from another scenario as well: Recovering Eurozone economies. Poland is not a Eurozone member, but the country has expressed For more on ETFs, click here.

Disclosure: Author owns none of the securities mentioned here.