For a good portion of 2013, analysts, money managers and pundits made it seem as though as U.S. stocks were the only game in town.
With few exceptions, Japan being one, global stocks and exchange traded funds spent most of this year not being viewed as credible complements or alternatives to the S&P 500. Investors that stuck with U.S. equities have been rewarded. There is no denying. With just two weeks left in 2013, the SPDR S&P 500 (NYSEArca: SPY) is up almost 27%, including dividends paid.
Some global ETFs have been even better. “Needless to say, a vast majority of the International Equity ETFs have underperformed the S&P 500 this year; however, there are a few that have managed to outpace this US Equity benchmark. In total, out of the 170 International Equity ETFs (excluding leveraged and inverse funds) there are only 10 with returns superior to the S&P 500 this year,” according to Dorsey Wright & Associates.
Among the more obvious global ETFs that have outpaced the S&P 500 are the WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ) and the db X-trackers MSCI Japan Hedged Equity Fund (NYSEArca: DBJP). DXJ, which has risen to acclaim for its asset-gathering prowess, and DBJP are up an average of 32% this year and both rank among the 10 best global ETFs in 2013. [10 Best Global ETFs of 2013]
Another WisdomTree fund is on the list of 10 global plays that have bested the S&P 500: The WisdomTree Europe SmallCap Dividend Fund (NYSEArca: DFE). Up almost 31% this year, DFE is also the top-performing diversified Europe ETF in 2013.
Speaking of Europe ETFs, two country-specific funds tracking stocks from the infamous PIIGS nations have offered returns in excess of the benchmark U.S. index. The iShares MSCI Ireland Capped ETF (NYSEArca: EIRL) has surged 36.2% making it the best single-country Europe ETF on the year. [Best Global Equity Markets by Single-Country ETFs]
For all the talk of Chinese stocks lagging their U.S. counterparts, three China ETFs have been better than the S&P 500. That trio is comprised of the Powershares Golden Dragon Halter USX China Portfolio (NYSEArca: PGJ), Guggenheim China Technology (NYSEArca: CQQQ) and the First Trust ISE Chindia Index Fund (NYSEArca: FNI).
Top 10 International Equity ETFs Outperforming the S&P 500 in 2013
Chart Courtesy: Dorsey Wright & Associates
Tom Lydon’s clients own shares of SPY and DXJ.