Some High-Flying Country ETFs Hail From Cheap Markets

With the technology and housing bubbles still fresh on many investors’ minds, it is not surprising that some view U.S. equities as richly valued following a 61% jump for the S&P 500 (^GSPC) since the start of 2011.

Actually, U.S. stocks are not too pricey. The S&P 500’s 12-month trailing P/E ratio is currently just under 16 compared to an average of almost 17 going back to 1999. Using the CAPE Shiller P/E methodology, which divides the S&P 500 by the last 10 years of earnings for the index’s components after adjusting both for inflation, the index’s P/E is 24.5, reports Joe Light for the Wall Street Journal.

That is below the CAPE Shiller P/E seen before the housing bubble and barely more than half the CAPE Shiller P/E of 44 seen just before the tech bubble burst, according to the Journal.

So by that metric, U.S. stocks are modestly pricey, but equities in some of the world’s top-performing markets this year still are not frothy. Importantly for investors, six of the world’s 10 cheapest markets as measured by the CAPE Shiller P/E ratio are accessible via single-country ETFs. [10 Best Global Equity Markets by ETFs]

Russia, the largest emerging market in the cheap CAPE Shiller top-10, has a reputation for trading at discounts to broader emerging markets indices. However, Russian stocks have gotten cheap relative to their own historical standards this year. Although Russia’s CAPE Shiller P/E is just 7.11, according to Cambria Investment data, investors have been reluctant to warm to Russia stocks and ETFs as the Market Vectors Russia ETF (NYSEArca: RSX) is down 6.6% this year. [A Tepid View of Eastern Europe ETFs]

The two cheapest markets as ranked by CAPE Shiller P/E are a former developed turned emerging market and a frontier market – Greece and Argentina. The Global X FTSE Greece 20 ETF (NYSEArca: GREK) is up almost 20% in the past 90 days, but Greece is still the cheapest market in the world by CAPE Shiller P/E. [Hurry to the Greece ETF]

The Global X FTSE Argentina 20 ETF (NYSEArca: ARGT) tracks some of the largest stocks in a country with a CAPE Shiller P/E of just 6.91. Up almost 13% this year, ARGT is by the best-performing single-country ETF tracking a Latin American nation this year.