In late 2011, I introduced the concept of investing in the CASSH countries– Canada, Australia, Switzerland, Singapore and Hong Kong.
These smaller, developed countries exited the financial crisis with less debt and healthier labor markets than their larger developed counterparts, and looked relatively cheap, trading at or below the average valuation of other developed markets.
The theme did well in 2012. Last year, on average, an equally weighted basket of these countries outperformed a broad global equity benchmark by roughly 5% in dollar terms.
But while the theme worked well last year, I’m no longer advocating it considering the uneven performance among the countries in 2013.
Some of the countries are looking expensive and or experiencing changing fundamentals.
Next page: Valuations and fundamentals