With the U.S. markets continuing to add onto their multi-year run, investors may consider more stable overseas stocks and exchange traded funds.
For instance, Benjamin Pedley, head of investment strategy for Asia at HSBC Private Bank, advises investors to focus on more stable plays, like going overweight Singapore stocks to capitalize on the markets’ defensive nature and higher yields, reports Leslie Shafter for CNBC.
“This is not the time to be taking a big swing at the market. This is the time to be slipping quietly into the background,” Benjamin Pedley said on CNBC. “Sometimes when we come to do these roadshows and we’re sort of upbeat and [say]‘this looks interesting,’ what we’re sort of saying now is just be a bit boring.”
ETF investors can gain exposure Singapore’s market through the iShares MSCI Singapore ETF (NYSEArca: EWS), which tracks the MSCI Singapore Index. The ETF has a heavy 56.1% tilt toward the financial sector, followed by industrials 19.2% and telecommunications 13.6%.
Compared to other Asian markets, Singapore stocks typically pay higher yields. EWS comes with a 3.37% 12-month yield.
“Singapore is not resource-rich, making it reliant on trade with other nations, primarily its Southeast Asian neighbors,” according to Morningstar analyst Patricia Oey. “With a relatively educated population, Singapore has been successful at developing high-skilled industries, which face less regional competition. It currently has a world-class marine engineering industry and a rapidly growing biomedical field.”
Singapore’s economy expanded 2.6% year-over-year for the first quarter of 2015, compared to 2.1% in the fourth quarter, Channel News Asia reports. On quarter-over-quarter basis, the economy expanded by 3.2%, compared to 4.0% growth in the preceding quarter.