For most of the world’s major equity bourses, 2013 has been a good year. However, few markets can hold a candle to Venezuela.
As of Tuesday, Venezuelan stocks were up an astounding 466% in local currency (bolivar) terms. Even when adjusting that number into dollar terms, it was still 287%. Alas, there is no Venezuela ETF and that might be a good thing given the country’s penchant for currency devaluations and hyper-inflation.
There are, however, plenty of single-country ETFs with which to track some of this year’s top-performing global markets.
Some notes about the following list. First, data applicable to the local benchmarks is in local currency terms and comes by way of Bespoke Investment Group. The data were posted on Nov. 12. Second, there will be discrepancies between local market and ETF returns because the following ETFs are not benchmarked to the primary indices in the countries the ETFs track.
Third, some markets in the top-10 were excluded because there is no applicable country-specific fund. For example, stocks in the United Arab Emirates, Pakistan, and Kuwait rank among the world’s 10-best performers, but there are no single-country ETFs for those nations. Investors can access those countries through diversified regional and frontier market funds. [Frontier Markets ETFs Could Soon be Buys]
Finally, a standard S&P 500 ETF is the choice for U.S. stocks. Without further ado, here is the list of the 10 best global equity markets to this point in 2013 represented by single-country ETFs.
Market Vectors Vietnam ETF (NYSEArca: VNM)
Local Market YTD: 20.3%
ETF YTD: 4.6%
Comment: Vietnamese equities and VNM surged in the first quarter on news policymakers and bankers there were taking steps to liberalize the frontier market’s economy and deal with bad debt. However, it was botched attempts at a TARP-esque, government-run toxic debt entity, among other factors, that sent VNM to another summer swoon. [Vietnam ETF Could End 2013 the Way it Started]
iShares MSCI New Zealand Capped ETF (NYSEArca: ENZL)
Local Market YTD: 20.9%
ETF YTD: 18.8%
Comment: ENZL has been impressive among developed markets ETFs this year, but that run was almost derailed by the near loss of New Zealand’s lone AAA sovereign debt rating due to a widening account deficit, which leaves the country vulnerable to external shocks. [An AAA Near-Miss for the New Zealand ETF]
First Trust Switzerland AlphaDEX Fund (NYSEArca: FSZ)
Local Market YTD: 21.1%
ETF YTD: 24.7%
Comment: The First Trust AlphaDEX ETF follows a smart-beta, or enhanced, indexing methodology that screens for growth factors like sales to price and 1-year sales growth, along with value factors, like book value to price, cash flow to price and return on assets. The market-cap weighted iShares MSCI Switzerland Capped ETF (NYSEArca: EWL) has gained 22.0%.
SPDR S&P 500 ETF (NYSEArca: SPY)
Local Market YTD: 23.7%
ETF YTD: 27.1%
Comment: SPY is the largest U.S.-listed ETF and tries to reflect the performance of the S&P 500 Index, which follows a market capitalization methodology of 500 large U.S. stocks. Apple (NasdaqGM: AAPL) is SPY’s largest holding.
Global X FTSE Greece 20 ETF (NYSEArca: GREK)
Local Market YTD: 24.5%
ETF YTD: 19.3%
Comment: The Greece ETF includes the twenty largest securities listed on the Athens Stock Exchange. Part of GREK’s surge is attributable to a broader resurgence by Europe ETFs, but there is far more to it with GREK, the lone Greece ETF. On Nov. 27, 10 Greek companies, including some GREK constituents enter the MSCI Emerging Markets Index and investors have been bidding up Greek shares in anticipation of that move. [Run, Don’t Walk to the Greece ETF]
iShares MSCI Finland Capped ETF (NYSEArca: EFNL)
Local Market YTD: 24.7%
ETF YTD: 32.5%
Comment: Since there is no such thing as a free lunch, there is a cautionary side to the EFNL story. Finland’s lethargic growth and rising debt-to-GDP ratio are putting EFNL’s good news story at risk. The Finnish government is desperate to maintain its AAA rating and is employing austerity as a means of doing so. That decreased government spending is crimping Finnish firms and some EFNL constituents. [Flirting With Finland…The ETF]
iShares MSCI Ireland Capped ETF (NYSEArca: EIRL)
Local Market YTD: 32.5%
ETF YTD: 42.3%
Comment: The Irish economy has strengthened and is on track to wean itself off the Eurozone and International Monetary Fund bailout program. If Ireland stays on course, the country will be the first Eurozone member to take itself off emergency aid. Other countries still on the bailout program include Portugal, Cyprus and Greece. [Ireland ETF Outperforms as Country Exits Bailout]
Global X Nigeria Index ETF (NYSEArca: NGE)
Local Market YTD: 36.4%
ETF YTD: Down 4.2% since its April debut.
Comment: Since NGE began trading on April 3, the ETF has declined 4.2%. Nigeria is the largest country in Africa by population and it is also the biggest oil producer on the continent. NGE tracks the largest and most liquid companies in Nigeria.
db X-trackers MSCI Japan Hedged Equity Fund (NYSEArca: DBJP)
Local Market YTD: 40.3%
ETF YTD: 39.0%
Comment: DBJP tracks the Japanese equities market while hedging against a depreciating yen through swap contracts – a weakening local currency diminishes returns in foreign currency-denominated investments once they are converted back to U.S. dollars. The WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ), which is up 32.1% year-to-date, provides a similar strategy, except DXJ’s holdings mainly consist of dividend-paying companies incorporated in Japan that derive less than 80% of their revenue from sources in Japan.
Global X FTSE Argentina 20 ETF (NYSEArca: ARGT)
Local Market YTD: 86.4%
ETF YTD: 12.7%
Comment: After slumping last year and being reverse split earlier this year, ARGT has been a surprisingly stout performer as of late. The ETF has also benefited from soaring Internet stocks. The ETF tracks the twenty largest and most liquid companies that participate in the Argentinian economy. [Argentina ETF not Sparked by World Bank Loan]