The top exchange traded fund performers for 2005 were influenced by foreign economic expansion, consumer spending and higher energy prices. Telecommunications, oil and building south of the border helped iShares S&P Latin America 40 Index (ILF) become the best performing ETF for the year with a gain of 55%.
iShares MSCI South Korea Index (EWY) was a close second with an increase of 54%. Technology, banks and autos made up most of the growth in South Korean companies. Both consumer spending and exporting of goods to the U.S. and China were reasons for the country’s economic improvement.
Rising oil, natural gas and precious metals prices produced 53% for iShares MSCI Brazil Index (EWZ).
Investors looking for one ETF with holdings in the world’s best performing markets would have done well to choose BLDRS Emerging Markets 50 ADR Index (ADRE); up 45% for 2005. More than two thirds of the portfolio has holdings in Brazil, South Korea, Mexico, China and Taiwan.
iShares MSCI Mexico Index (EWW) enjoyed a 44% gain because of its large allocation to telecommunication companies America Movil and Telefonos de Mexico.
International markets offered some great investment opportunities. ETFs make it easier for investors to participate in all domestic asset classes, global regions and industry sectors. Most importantly, ETFs give investors the opportunity to participate where markets have been showing promise. Based on economic growth and favorable valuations, expect specific global regions to be leaders in 2006.
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.