Interestingly, four of the highest CAPEs at the end of 2012 hailed from Latin America and that translated to some dismal performances in 2013 for the major Chile, Mexico, Colombia and Peru ETFs. On the other hand, the lowest Latin America CAPE at the end of last year, as represented by a country ETF, was Argentina and the Global X FTSE Argentina 20 ETF (NYSEArca: ARGT) has been by far the best performer among LatAm single-country ETFs this year. [Worst Global Markets by Country ETFs]
There are at least two other ties that bind the struggling high CAPE country ETFs: Commodities exposure and current account deficits. Of the 10 ETFs tracking high CAPE countries, six represent major commodities-producing nations: Canada, South Africa, Chile, Mexico, Colombia and Peru.
Three of the high CAPE countries – India, Indonesia and South Africa – have been hurt by rising account deficits and weak currencies this year. To be fair, India ETFs have perked up in recent weeks with the WisdomTree India Earnings ETF (NYSEArca: EPI) up 17.2% in the past 90 days.
High CAPE ETFs
Chart Courtesy: Mebane Faber, Cambria Investments