Hot spots within financial markets across different countries may be easier to spot than you think and exchange traded funds (ETFs) may help guide you.
Ron DeLegge of ETFGuide says there are certain things to keep in mind when it comes to single-country funds, including:
- They’re often sector bets. For example, Market Vectors Russia (RSX) is 42.6% allocated in energy, making it sensitive to any movements in that area.
- They carry unique risks. Some of the countries with smaller stock markets might me overweight in the largest of the country’s companies, and there are political risks at times, too.
- They can be more expensive. The average expense ratio for a single-country ETF is 0.58%, and the average for a broad international fund is 0.47%.
As of now, there are 51 ETFs tracking specific countries. Among the top-performing ETFs year-to-date are:
- iShares MSCI Brazil (EWZ) up 20.8%
- iShares MSCI Canada (EWC) up 10.2%
- iShares MSCI Taiwan (EWT) up 10.6%
…and not so well:
- SPDR S&P China (GXC) down 11.9%
- iShares South Korea Index (EWY) down 10.5%
- iShares MSCI Malaysia Index (EWM) of 8.8%
Whichever country you choose, do your research, and make sure it’s above its trend line.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.