Because I am a risk manager first and foremost, my career has led me to be naturally skeptical of “progressive” moves in stocks and exchange-traded funds (ETFs). He kept me out of trouble by not chasing stocks like Oracle (ORCL) and Advanced Micro Devices (AMD) in recent months. But it’s hard for me on the other end.
As with the iShares Asia 50 ETF (AIA). This has been my go-to for investing in Asia outside of Japan. I like its simple, 50-share, market-cap-weighted structure. I’ve had it several times over the years, but not recently. Because I find the global stock market too correlated for me to be excited about moving too far away from where the core of the market is: the S&P 500 Index ($SPX), the Dow ($DOWI), and the Nasdaq ($NASX).
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That hardened view on risk management can also cost some advantages. I will miss moves like the one we just saw at AIA. It broke the recent trend and rose without the US markets leading it. And after a move of more than 30%, from $90 in late November to nearly $119 at Wednesday’s close, the fair question is whether AIA and the Asian stock market outside of Japan are now the leader.
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I would describe the above weekly price chart as if it had not peaked yet. That doesn’t mean you can’t do it soon. That is the market climate in which we live. But the other price-based factor to point out is perhaps the biggest bullish argument I can make for ETFs like AIA and Asian stocks in general. Maybe you’re making up for a lot of lost time.
The AIA laid a “chicken egg” from April 2021 to August 2025, more than four years with practically zero performance. And the portfolio’s current price-to-earnings (P/E) ratio of 16 times tells me that not long ago it was between 12 and 13 times. That’s long-term bottom territory for a market like this.
AIA owns the pan-Asian region’s economic heavyweights, tracking the 50 largest and most liquid companies in China, Hong Kong, South Korea, Singapore and Taiwan. The fund is heavily anchored in the technology sector, which represents more than half of its market value. This concentration makes it a primary vehicle for expressing a regional vision on Asian growth, particularly as it relates to the global development of artificial intelligence. It can also be a strong diversifier of American technology.
The fund’s geographic composition is dominated by mainland China, Taiwan and South Korea, which together account for more than 85% of the total allocation. At the stock level, while this ETF has 67 holdings, only 10 represent three-quarters of the assets.
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So, as with many stock ETFs, you’re not buying one “market,” but rather a handful of big players. The rest are really just accounting entries. They do not usually move the total value of the portfolio.
The current run on AIA is supported by improving fundamentals in its core markets, particularly South Korea and Taiwan, where earnings growth expectations are high due to demand for semiconductors. South Korea has emerged as a particularly high-conviction area for 2026, with some analysts projecting substantial gains in Korean stocks driven by record foreign capital inflows and a cyclical rebound in exports.
Looking ahead, key impacts on AIA’s performance range from the impact of currency fluctuations, as the falling US dollar historically provides a tailwind for capital inflows into the Asian market, to the evolving regulatory landscape in China and how the growth of app-based platform companies could diverge from the hardware-driven growth seen in Taiwan and Korea. And, of course, there is a high potential for return and risk when you own so few stocks cluttering the fund’s asset base.
Chart courtesy of Rob Isbitts via ROAR.PiTrade.com.
I ran a ROAR analysis on AIA and it points out what I said at the beginning of this article. Its ROAR score turned green (70 or higher) last May, around $75 per share. That was the easy part, in retrospect.
There was another lower risk signal on October 10, 2025, around $91. But as is often the case in my predominant risk management system, when the price increase occurred, AIA’s ROAR score lost value. It remains in the neutral risk zone (ROAR score of 40), but the trees don’t grow to the sky, as they say.
What’s next? I’m not a binary investor trying to predict the future, which, as Yogi Berra once said, is very difficult. What I can say about AIA is that the conditions are there to continue. And ROAR assigned a 40% chance that the next major move will be up, not down. But that also means a 60% chance that the next big move will be down.
This is the life of a risk manager. That’s why perhaps the way to consider this and other “price-adjusted” ETFs is to consider owning it at a smaller size than normal. What is normal? That depends on each investor.
Rob Isbitts created the Roar Scorebased on his more than 40 years of experience in technical analysis. ROAR helps DIY investors manage risk and build their own portfolios. To view Rob’s written research, see ETFYourself.com.
On the date of publication, Rob Isbitts had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
