The 2014 World Cup kicks-off Thursday in Brazil, Latin America’s largest economy. Overall, there are 32 teams in the World Cup, 21 of which have at least one U.S.-listed country-specific exchange traded fund.
Groupings for what is widely seen as the best World Cup field ever were released in late 2013 and at that time, we took a look at some of the single-country ETFs linked to the nations with reasonable to high odds of hoisting the cup when the tournament concludes next month. [10 ETFs for Possible World Cup Winners]
Of course, the odds have changed since then as injuries have been revealed and rosters have been finalized. Prior to Thursday, we will revisit the ETFs tracking the countries with high odds of winning the 2014 World Cup.
However, this list is a look at the pretenders or those countries with low odds of winning the championship. For investors, the good news there are some solid ETFs tracking countries that are not threats to be World Cup Champions.
Odds are courtesy of Sky Bet as of Friday afternoon June 6, 2014.
iShares MSCI Australia ETF (NYSEArca: EWA)
Odds to win the World Cup: 2,500/1
ETF YTD: Up 9.9%
Comment: At 2,500/1, Australia is tied with Costa Rica and Iran, two countries with no corresponding ETFs, for the lowest odds to win the 2014 World Cup. That is alright because Australian stocks have delivered for investors this year, as highlighted by EWA’s performance, despite high valuations.
The WisdomTree Australia Dividend Fund (NYSEArca: AUSE), which is up 6.3% this year, is slightly cheaper on valuation than EWA. Both ETFs offer exposure to rising Australian, which totaled $40.3 billion last year, nearly double the amount paid in 2012, and are expected to grow again this year. [Say G’Day to Australian Dividends]
Global X Nigeria Index ETF (NYSEArca: NGE)
Odds to win: 300/1
ETF YTD: Down 0.8%
Comment: Although the lone Nigeria ETF is slightly lower year-to-date, Nigerian stocks gained momentum in recent weeks in anticipation of the country becoming a larger part of the MSCI Frontier 100 Index. Early last week, Nigerian shares touched their highest levels since January on heavy turnover thanks to index-related buying. NGE is up 7% in the past month.
iShares MSCI South Korea Capped ETF (NYSEArca: EWY)
Odds to win: 250/1
ETF YTD: 6.2%
Comment: South Korea, Asia’s fourth-largest economy and one of the most advanced, least volatile emerging markets, split hosting duties with Japan for the 2002 World Cup. Although investors have pulled $84 million from EWY this year, the low beta fund has been a solid performer even as more volatile emerging markets have soared.
Another option to consider is the Horizons Korea KOSPI 200 ETF (NYSEArca: HKOR). HKOR is the only U.S.-listed South Korea ETF that acts as a proxy for the Kospi 200, South Korea’s equivalent of the S&P 500. The Kospi 200, HKOR’s underlying index, is the most widely used Korean stock benchmark used in Korea, as well as the rest of Asia. HKOR is up more than 6% since its early March launch. [South Korea ETFs Could Shoot Higher]
SPDR S&P 500 ETF (NYSEArca: SPY)
Odds to win: 250/1
ETF YTD: 6.7%
Comment: The S&P 500 and the Dow Jones Industrial Average reached new record highs on Friday after the Labor Department said the economy added 217,000 jobs in May. Although this year’s move higher for U.S. stocks has been buoyed in large part by large- and mega-caps, those expecting more upside will be heartened to know the Russell 2000 turned positive on the year late last week. [Big Stocks Drive Market Rally, These ETFs]
Momentum sectors are also bouncing back. Over the past month, the major biotech, Internet and social media ETFs have all traded higher.
Global X FTSE Greece 20 ETF (NYSEArca: GREK)
Odds to win: 200/1
ETF YTD: Up 6.9%
Comment: GREK had some issues in mid-May as Greek bond yields spiked, but the ETF has gotten on track in recent weeks after Fitch Ratings boosted Greece’s long-term foreign and local currency Issuer Default Ratings (IDR) to B from B-. The country is expected to post a modest surplus of 1.4% of GDP this year.
iShares MSCI Mexico Capped ETF (NYSEArca: EWW)
Odds to win: 200/1
ETF YTD: Up 2.6%
Comment: EWW and the db X-trackers MSCI Mexico Hedged Equity Fund (NYSEArca: DBMX) were on the receiving end of some good news Friday after Banco de Mexico, the country’s central bank, surprisingly cut interest rates. Amid signs Latin America’s second-largest economy is still struggling, Banco de Mexico pared its benchmark rate by 50 basis points to 3%, a record low. [Mexico ETFs Get Help From Surprise Rate Cut]
EWW is the larger of the two funds, but if the peso materially weakens, the currency hedged DBMX could see additional upside.
WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ)
Odds to win: 150/1
ETF YTD: Down 1.7%
Comment: DXJ’s year-to-date loss is somewhat deceiving because the bulk of the losses for it and other Japan ETFs were accrued in the first quarter. In arguably unnoticed fashion, Japan ETFs have soaring. DXJ is up almost 7.7% in the past month. So is the db X-trackers MSCI Japan Hedged Equity Fund (NYSEArca: DBJP). Several members of WisdomTree’s yen-hedged Japan sector suite, which is two months old, hit new highs late last week. The U.S. dollar is up 1% against the yen over the past month. [Bank on Japanese Banks With This ETF]
iShares MSCI Switzerland Capped ETF (NYSEArca: EWL)
Odds to win: 100/1
ETF YTD: Up 9.7%
Comment: Switzerland is not the international football power that neighboring Germany and Italy are, but EWL has been powerful, particularly when considering the conservative reputation of Swiss equities. Swiss stocks are a tad pricey compared to peripheral Europe equivalents, the result of the market’s heavy concentration in conservative sectors such as health care and consumer staples. Those sectors combine for nearly 51% of EWL’s weight. EWL is a top-heavy ETF as Nestle (PK: NSRGY) Roche and Novartis (NYSE: NVS) combine for over 44% of the fund’s weight.
Market Vectors Russia ETF (NYSEArca: RSX)
Odds to win: 80/1
ETF YTD: Down 5.4%
Comment: RSX and rival Russia ETFs are still sporting year-to-date losses, but as Bloomberg reported Friday, Russia’s benchmark Micex Index has surged 20% from its March 14 lows, meaning Russian stocks are in a bull market.
RSX is up more than 20% since that day while the ETF’s small-cap cousin, the Market Vectors Russia Small-Cap ETF (NYSEArca: RSXJ), is higher by 23% over that time. All four non-leveraged Russia ETFs ranked among May’s top ETFs. The country hosts the World Cup in 2018.