Although defensive sectors such as consumer staples and telecom outperformed last month, October was another good month for the bulls as U.S. equities shook-off the government shutdown and fears of a debt ceiling disaster to race to record highs.
October was also a strong month in terms of ETF inflows. An estimated $20.9 billion poured into U.S. equity funds as of October 30 compared with $12.9 billion in September. ETFs offering exposure to sectors such as industrials and technology saw robust inflows as well. [ETFs for the Best Six Months]
But while it was a fine month for U.S. stocks, the list of October’s 10 best non-leveraged ETFs, which follows, is littered with international plays, including some representing what was recently one of the most controversial and downtrodden emerging markets. Those looking to review October’s worst ETFs can click here, but let’s get on to non-leveraged the winners.
iShares MSCI Italy Capped ETF (NYSEArca: EWI)
October returns: 8.2%
Comment: Attracted to the cheap valuations, investors turned to Italian stocks last month after political instability sent Italian equities reeling. [Abrupt Resignation in Coalition Government Upends Italy ETF]
“I can’t say more due to corporate rules but I can confirm that the whole of the Milan bourse generally interests us,” BlackRock Managing Director Mike Trudel said in a Reuters article earlier in October.
VelocityShares Emerging Markets DR ETF (Nasdaq: EMDR)
October returns: 8.3%
Comment: Emerging markets ETFs have been showing signs of awakening from long slumbers and that theme was displayed last month. Moreover, with the Fed sticking to its accommodative measures, the promise of continued easy money is flowing back into riskier emerging market equities.
iShares India 50 ETF (NasdaqGS: INDY)
October returns: 8.3%
Comment: Indian equities surged over October after the country’s new central bank chief, Raghuram Rajan, took over and promised to boost growth. Rajan has already implemented more stringent monetary policies to help strengthen the beaten down rupee currency. INDY tracks the largest 50 Indian stocks by market capitalization.
EGShares India Consumer (NYSEArca: INCO)
October returns: 8.9%
Comment: The Bank of India’s new direction helps the country’s domestic economy. Accordingly, India’s consumer sectors are in a great position to capitalize on the revitalized domestic activity. INCO follows 30 stocks with a bias towards staples names.
iShares MSCI India Small-Cap ETF (NYSEArca: SMIN)
October returns: 9.4%
Comment: With the Bank of India’s focus on improving the economy, smaller firms, as opposed to more established companies or large exporting firms, are better positioned to capitalize on the rebound. SMIN tracks the bottom 14% of the equity market capitalization in India. The EGShares India Small Cap (NYSEArca: SCIN), which gained 8.6% over October, is another ETF option.
Market Vectors Egypt Index ETF (NYSEArca: EGPT)
October returns: 9.4%
Comment: Egyptian stocks have been seesawing over the past few years as unrest and political instability rattled the country, with the military taking over during the summer. However, the stable political environment attracted investors hunting for cheap valuations. [A Surprising EM ETF Keeps on Soaring]
EGShares India Infrastructure (NYSEArca: INXX)
October returns: 10.4%
Comment: Larsen & Toubro, India’s largest infrastructure conglomerate by revenue, experienced a string of better-than-expected results, reports James Crabtree for Financial Times.
“Beyond liquidity, the underlying factor here is that outside the really popular areas like IT and pharma, a lot of the broader market is actually pretty attractively valued,” Andrew Holland, chief executive of Ambit Investment Advisors, said in the Financial Times article. “So investors have come back in now feeling confident about global conditions, and taken a look at industries they didn’t like much before, and found that they look reasonably priced.”
PureFunds ISE Diamond/Gemstone ETF (NYSEArca: GEMS)
October returns: 12.5%
Comment: The diamond industry is sitting on sound fundamentals, with demand expected to outpace supply in the years ahead. GEMS is the only ETF to specifically target the precious gemstone and diamonds mining industry. [Diversify Hard Asset Exposure with Precious Stones ETF]
Global X FTSE Greece 20 ETF (NYSEArca: GREK)
October returns: 15.6%
Comment: Greek stocks have been volatile and underperformed over the past few years during the height of the Eurozone financial crisis, but the economy is emerging from the crisis. Attracted to the cheap valuations, large hedge funds, including Paulson & Co. and Greenlight Capital, are piling into Greek equities. [After Hedgies Rush to Banks, Mobius Warms to Greece]
VelocityShares Emerging Asia DR ETF (NasdaqGS: ASDR)
October returns: 18.5%
Comment: The VelocityShares Emerging Asia ETF surged early in the month and continued to slowly strengthen on low volume trades. ASDR only tracks emerging Asia country stocks, with a significant 20% allocation toward Samsung.