Yes, a lot depends on the U.S. dollar and the plethora of headlines to come. While we are not in the business of predicting exact outcomes, we do know a thing or two about trends, cycles, momentum and reversion to the mean. So far this year, the trend is beginning to turn. In the first quarter of 2017, the ACWX ETF outperformed SPY by 2.25%, and EEM outperformed SPY by 6.44%. This makes sense as the U.S. Dollar retreated 4.78% during the quarter.3

Is leadership changing?

It certainly did during 1Q17 but it will take a more sustained period of international leadership before it shows in the 3-year rolling average chart above.  Trends don’t last forever, and we are encouraged by how our international allocations are reacting to the leadership change.

David Haviland is a Managing Partner and Portfolio Manager at Beaumont Capital Management, a participant in the ETF Strategist Channel.

Disclosures:

1Bloomberg as of 3/31/17

2O’Shares Webcast. “International Equities: Why? When? How? ONTL Webcast”. April 17, 2017

3TheChartStore.com chart “U.S. Dollar Index (DX)”. As of 3/27/17

Past performance is no guarantee of future results. As with all investments, there are associated inherent risks including loss of principal. Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. This is for illustrative purposes only and is not a recommendation or advice for any investment vehicle included.