Taper tantrums were heard all over the emerging markets in 2013, especially in the ‘Fragile Five’ countries. These countries – Brazil, Turkey, India, Indonesia and South Africa – were then hugely reliant on foreign capital to finance their external deficits which put these at risk post QE exit by the Fed.

This was because the end of the cheap-dollar era had led to an uproar in these markets with their currencies plunging to multi-year lows. Widening current account deficit and worsening external debt conditions were the main headaches of the pack.

Moreover, most of these nations had some structural problems of their own which added to this turbulence. However, more than two years have passed since then and several changes – mainly political – have taken place in those countries. While a shift in political power and pro-growth reformative changes boosted India during the mean time, changes in Indonesia are yet to reap returns.

Meanwhile, India and Brazil managed to shrug off these risks to a large extent while Colombia and Mexico have entered this vulnerable bunch. These two have joined other three laggards namely Indonesia, Turkey and South Africa to form a new Fragile Five emerging market bloc, per JPMorgan Asset Management.

What Pushed India & Brazil Out of Fragile League?

India has been able to reduce its current account deficit to 1.4% of GDP from 5% in 2013, the steepest cutback by any major emerging market, per Bloomberg. While Brazil has not been successful on this front as the commodity market crash restrained the economy to excel on this current account metric, Brazil offers foreign investors the highest interest rates.

Notably, foreign investors park their money in the riskier emerging market bloc for higher yields. Brazil’s real cost of borrowing is the highest among the world's leading emerging markets. This might keep the flair for the Brazil investing still alive among some yield-hungry investors despite fast deteriorating fundamentals of the economy.

Coming to the ETF exposure, all Brazil ETFs were in deep red this year losing more-or-less 30% each. Only one ETF – MSCI Brazil Hedged Equity Fund (DBBR) – lost 10% due to its currency-hedged technique. However, India ETFs appear steadier with exchange-traded products swinging between profits and losses. Highest gains of 7.6% were accumulated this year by India Consumer ETF (INCO) (read: India Small Cap ETFs: Best of Emerging Markets Now?)

DBBR has a Zacks ETF Rank #3 (Hold) while INCO has a Zacks ETF Rank #1 (Strong Buy).

What Brought Mexico & Colombia In?

The second-largest economy of Latin America, Mexico, was fated for a downtrend mainly due to the oil price rout. Oil revenue makes up about a third of the Mexican government’s revenues. This, coupled with the recent strength in the greenback, caused an extreme upheaval in Mexican peso recently and led the currency toward its lowest close on record in early August.

Mexican peso fell about 3.7% in the last one month (as of August 13, 2015). On August 12, Mexico's central bank lowered its 2015 economic growth outlook to the range of 1.7 – 2.5% from 2 –3% to reflect lower-than-expected export and reduced oil output.

Due to the low inflation, Mexico’s interest rate is also low at 3%, way low from an EM perspective. As per J.P. Morgan, the economy’s real interest rate hovers around zero which leaves no way out for the government to the ease monetary policy further and quicken the economy. In short, low yield opportunity fails to lure investors toward Mexico (read: Which Country ETF Wins Cinco de Mayo 2015?).

Mexico ETFs were moderately beaten up in the early part of this year, but crashed in the last one-month phase with Deutsche X-trackers MSCI Mexico Hedged Equity ETF (DBMX), iShares MSCI Mexico Capped ETF (EWW) and SPDR MSCI Mexico Quality Mix ETF (QMEX) all losing in the range of 3.5% to 6%. Thanks to the currency-hedged approach, DBMX lost the least. DBMX has a Zacks ETF Rank #2 (Buy) while EWW has Zacks ETF Rank #3.

Colombia was another victim of the oil crash. Oil accounts for more than half of Colombia’s exports. As a result, Latin America's fourth-largest economy was hard hit by a drop in foreign direct investment in the oil sector, which continues to widen the current account deficit.

The country’s currency tumbled 25% in the last one month against the greenback. The Colombian peso’s 37% fall in the last one year was the third-worst performance among 151 currencies tracked by Bloomberg. The economy’s 2015 growth will mark the most sluggish pace in six years and its current-account deficit will likely be the widest in three decades, per Bloomberg (read: Colombia ETFs in Focus after Incredible Crash).

Two Colombia ETFs Global X MSCI Colombia ETF (GXG) and MSCI Colombia Capped ETF (ICOL) have lost 30% so far this year while around 12% losses were incurred in the last one month. Both GXG and ICOL have a Zacks ETF Rank #5 (Strong Sell).